Episode 88: Want to get more when you sell your company?

Because of their recent projects, David and Eric give some updates on the current dynamics they are seeing in middle market mergers and acquisitions (M&A). They emphasize factors that influence business valuations and sale-ability. They discuss how external risks like geopolitical tensions and tariffs impact M&A, but stress the importance of focusing on controllable internal factors to maximize business value. There are key strategies for business owners to prepare for a successful exit, regardless of market conditions.

• Over-reliance on the owner: Buyers discount businesses where the owner is too involved in daily operations, as it raises concerns about continuity post-sale. Building a strong team and processes mitigates this risk.
• Customer and supplier concentration: High dependence on a few customers or suppliers reduces valuation. Diversification and long-term contracts help stabilize revenue streams.
• Recurring revenue models: Businesses with predictable, recurring revenue (e.g., subscriptions or contracts) command higher valuations due to lower cash flow risk.
• Market timing vs. controllable factors: While external conditions influence M&A activity, improving business fundamentals ensures better outcomes in any market.

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