What Are You Actually Selling?

At some point, most business owners arrive at what feels like a simple question: when should I sell my business, and what will I get for it?

It feels simple because it sounds like one question. It isn't. It is actually a sequence of questions — each one dependent on the answers before it — and most founders don't know the sequence exists until they're already in the middle of it, talking to someone who only knows how to answer one of them.

I have sat across from a lot of founders over the years at exactly this moment. Some of them came in thinking they were ready. Some came in knowing they weren't but wanting to understand the path. A few came in having already started a process that had quietly gone sideways. What almost all of them had in common was this: they had been thinking about their exit in the abstract — as a destination — without a clear map of the terrain between here and there. And in the absence of a map, they had hired the first guide who said they knew the route.

That guide usually knew one route. Because that's how guides work.

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Here is something most entrepreneurs don't know about the legal and advisory world they're about to enter when they start thinking about a liquidity event:

It is extraordinarily specialized, and the specialists almost never tell you what they can't do.

There are attorneys who do nothing but M&A transactions — buy-side and sell-side, middle market, straightforward asset and stock deals. That is their entire world. When you call them with an exit question, the answer is a transaction. Because that's the tool.

There are attorneys and advisors who do nothing but ESOPs — Employee Stock Ownership Plans, which allow a founder to sell some or all of their company to their employees through a qualified retirement plan, often with meaningful tax advantages. When you call them with an exit question, the answer is an ESOP. Because that's the tool.

There are estate planning attorneys and family business advisors whose entire practice is organized around multi-generational wealth transfer — passing the business to the next generation, restructuring ownership through trusts and partnerships, managing the tax consequences of keeping the business in the family. When you call them with an exit question, the answer involves the family. Because that's the tool.

These are all legitimate paths. Any of them might be exactly right for a given founder in a given situation. But here is the problem: in most cases, you don't call all three. You call one. Usually the one a friend referred you to, or the one whose name came up first, or the one you happened to meet at an industry event. And that advisor — whatever their specialty — is almost certainly not going to open the conversation by saying, *actually, I'm not sure my approach is the right fit for what you're describing.*

They're going to start solving. Because that's what specialists do.

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Private equity has made this more complicated, not less — and it has done so in a way that is particularly disorienting for founders, because PE has become so visible and so frequently discussed that most entrepreneurs think they understand it. They don't. Not because they're unsophisticated, but because "private equity" has become a single label applied to a landscape of fundamentally different animals.

Some PE funds want a minority stake — twenty or thirty percent — in a high-growth company. They want to be a financial partner, not an operator. They will provide capital, occasionally a board seat, and access to their network, but they are not trying to run your business.

Some funds want a majority position or outright control. They are buying the business as an operating asset and intend to manage it, grow it, and eventually sell it at a higher multiple. Your role in that story may be large or small depending on what they need.

Some funds only do full acquisitions. They are not interested in partnership structures. They want to own the whole thing.

Some are sector-focused and will only look at businesses in specific industries. Some have minimum EBITDA thresholds that immediately disqualify most small and mid-market companies. Some specialize in founder-led businesses and are experienced at managing the complexity of a founder transition. Others are not, and the friction shows.

To most entrepreneurs approaching this landscape for the first time, these are all just "private equity." They are not fungible. The difference between finding the right fund and the wrong one — or pursuing a PE path when a different structure entirely would have served you better — can be the difference between a great outcome and a deeply disappointing one. Or between selling now and realizing three years later that you sold to the wrong buyer.

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This is where I come back to the question at the beginning: what are you actually selling?

Not in the legal sense — the shares, the assets, the contracts. In the strategic sense. What is the thing of value that you have built, and who is the right buyer or partner for it? What do you want your life to look like after the transaction? Do you want to stay involved, and for how long? Do you want your employees taken care of? Does the business's legacy matter to you? What is the number you actually need — not the number that sounds impressive, but the number that, after taxes and fees, funds the life you want?

These questions sound soft. They are not. They determine everything — which path makes sense, which advisors to engage, how to structure the transaction, when to go to market, and what to say no to when the wrong offer comes in from the wrong buyer.

I had a client — I'll call him Gary — who came to see me on my birthday in 2018 with a number in his head: twelve million dollars. When I told him his business was probably worth six to seven hundred thousand at that moment, he was stunned. But he asked the right question: *what do I need to do?* We spent the next two hours working backward — from the net number he needed, through taxes, through transaction value, through the EBITDA multiple his industry commanded at different revenue thresholds, all the way to headcount and org chart.

That conversation was not a legal conversation. It was a map. And having the map changed everything about the decisions Gary made over the next eight years.

Not every founder needs eight years. Some are closer than they think. Some need to make a few structural changes before going to market. Some have a business that is genuinely ready today, and the question is just finding the right buyer in the right category. But almost none of them arrive at that clarity without someone who knows the whole landscape — not just one corner of it — helping them see where they actually are.

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The best exits I have been part of over 26 years didn't start with a transaction. They started with a conversation about what the founder actually wanted, and an honest assessment of what they actually had. Sometimes that conversation led to a traditional sale. Sometimes it led to a recapitalization with a PE partner who took a minority position and helped the founder grow toward a larger exit later. Sometimes it led to a management buyout, or an ESOP, or a decision to keep building for a few more years before doing anything at all.

The right answer is different every time. What is the same every time is the need to ask the right questions before you start, with someone who isn't going to steer you toward the only road they know how to drive.

If you're starting to think about what your exit looks like — whether that's next year or five years from now — I'm always happy to talk. No meter running. And no predetermined destination.