Start to a straight answer
Ten days, not ninemonths.
A brokered sale takes six to nine months of not knowing. That is not diligence, that is just how the process is built.
I can get you an answer in ten days because I am one person spending my own money and there is no committee to wait on. If it is a yes, the offer comes with it.
I pass on most of what I look at. I only buy things I can see a way to run better, and that is a narrow list. So the honest promise is not that I will make you an offer. It is that you will know quickly either way.
The ten days
What actually happens, in order.
- Day 1
A thirty minute call.
NDA signed before it starts. You tell me what the business does and why you are thinking about this. I tell you straight away if it is not a fit.
- Days 2 to 3
You send three things.
The last three years of profit and loss, a rough inventory and equipment figure, and a list of who does what. No data room, no formal package, no accountant bill.
- Days 4 to 7
I do the work.
I build the number and the structure. If I have questions I call you, not your staff. Nobody at your business knows any of this is happening.
- Day 10
You get an answer either way.
If it is a yes, you get it in writing: price, structure, where the money comes from, what happens to your people, what happens to the name, and what your role is after. One document you can hand to your CPA. If it is a no, you get a phone call and the actual reason, in a sentence you can repeat to your accountant.
- After
Then it is your move.
If there is an offer, you can say no, counter it, or sit on it for a year. If it goes forward, real diligence and closing usually takes another sixty to ninety days.
Plain English
Every word somebody is going to use on you.
The people who use big words are usually gatekeeping. Here is what each of these actually means, so nobody can use one to move you.
01SDE, or seller's discretionary earnings
What you would actually put in your pocket if you owned the business and did the job. Profit, plus your salary, plus the truck and the phone and the insurance and anything else the business buys that is really for you.
This is the number the price gets built on. Not revenue.
02EBITDA
The same idea for bigger businesses, except it assumes you are paying a manager to do your job. So it is SDE minus what it would cost to replace you.
03The multiple
How many years of earnings the buyer pays up front. Two to three times is normal for a business this size. A higher multiple means the buyer thinks the earnings are safe without you in the building.
04LOI, or letter of intent
A piece of paper that says here is what I would pay and here is how. It is not a contract and it does not bind you to sell. It exists so both sides stop guessing before anybody spends money on lawyers.
05Seller note
Part of the price gets paid to you over time, with interest, instead of all at close. You are effectively lending the buyer part of it. It is the strongest guarantee you can get that the buyer intends to run it well, because if it fails, they still owe you.
06Earnout
Some of the money comes later, based on how the business does after you leave. Be careful with these. Once you are gone you do not control the thing the payment depends on. I would rather pay you a clean price than dangle one.
07Due diligence
The buyer checking that the business is what you said it was. Books, contracts, equipment, employees, permits. It should be boring. If it turns into a fishing trip for reasons to lower the price, that is a bad buyer.
08Asset sale versus stock sale
In an asset sale the buyer takes the equipment, the name, the customers, and the contracts, and leaves the legal entity with you. In a stock sale they buy the company itself, warts included.
This is mostly a tax and liability question, and it can move real money. It is the first thing to take to your CPA.
Day one
The first step is a thirty minute call and an NDA.
Nothing about it is public and nothing about it commits you. If you want to start one step earlier than that, just get the number.