Seller expectations: “Too many business owners believe their company is worth more than the market is
willing to pay. This is a dangerous disconnect that can put a business owner’s financial future at risk,” said
Ryan Hemmert, Founder of Washington Business Brokers. “It’s important to get an estimate of value, or
some kind of business valuation, on a regular basis. That’s the only way business owners can know if a sale
can realistically support their retirement or other future goals.”
Financial records: “Poor financial recordkeeping is a bigger issue in the Main Street market where it’s
common for businesses to operate under their own bookkeeping standards,” said Sara Vazari, President of
Zoom Business Brokers. “In the lower middle market, sellers are more likely to have a controller or CFO, or
an outside accounting firm that reviews their numbers monthly. We’re even seeing some sellers get audited
financials or a quality of earnings report before going to market, and that gives buyers a boost of confidence
in their numbers.”
Interest rates: “It’s not surprising that interest rate instability became a bigger issue in the lower middle
market. That’s where private equity tends to play, and those financial buyers have been hit hardest by the
recent shakeup in debt financing,” said Carrie Duval, CEO of 1st & Main Partners. “Buyers can’t get the
financing they’re used to, and that’s complicating dealmaking.”
Owner/family fulltime: “This isn’t about having family members working in the business; it’s about
succession planning,” said Lisa Riley, President of Delta Business Advisors, LLC. It’s a plus anytime you
have experienced managers who intend to stay and support the owners—whether they’re family or
not. “The issue is when you have EXITING owners who are active in day-to-day operations, as that presents
continuity issues and risk,” Riley continued. “Start grooming your next generation leaders. Buyers want to
know the business can continue to operate successfully, even after the owners are gone.”