entrepreneurship
The Messy Marketplace
Brent Beshore 2021 14 references
A seller's-side guide to selling a privately held lower-middle-market company — deciding whether to sell, buyers, valuation, deal terms, the sale process, and due diligence.
selling-a-business mergers-and-acquisitions business-exit deal-structure valuation due-diligence private-equity
Overview
The Core Framework
- The marketplace is messy. The market for smaller private companies is disorganized, opaque, and low-trust — the finance industry's "buttoned up" image is a myth. The seller is usually the least-experienced party in the room.
- Money is rarely a good reason to sell. You almost always do better financially keeping a performing company. Sell for one of the seven root motivations (freedom, health, risk, legacy, etc.) — and define "what winning looks like" first.
- Price is not a number. Decompose every offer into amount × timing × probability of cash. Headline price means little until you trace the waterfall and capital stack.
- Buyer character ≥ buyer's checkbook. Because so much consideration is deferred and discretionary, who the buyer is — and whether they can actually close (committed capital) — decides whether you get paid.
- Disclose early, "warts and all." The same flaw is a priced risk if disclosed early and a deal-killer if discovered late. Surprises are the enemy.
Quick Lookup
| Situation | Do This | Avoid This |
|---|---|---|
| Tempted to sell for the money | Re-check the seven motivations; model keep-vs-sell | "Timing" the market — it's fool's gold |
| A buyer offers a high headline price | Trace amount/timing/probability through the waterfall | Anchoring on the number; ignoring terms & debt |
| You have a known flaw (concentration, owner reliance, a lawsuit) | Disclose it early and frame it | Hiding it until diligence finds it |
| Picking who to work with | Vet on the six advisor traits; use the Larry Bird method | Hiring a generalist lawyer; misaligned fees |
| Choosing among buyers | Check funding source / committed capital | Assuming the highest bid is the surest close |
| Post-LOI, buyer lowers the price | Recognize re-trading; lean on your BATNA | Caving because you're locked in exclusivity |
| After closing | Expect a 1–3 yr "new normal"; keep a Decision Notebook | Expecting a permanent vacation; nursing remorse |
The Key Insight
"It's a messy marketplace, with every type, temperament, and motive imaginable." — Brent Beshore, (A Note From the Author)
Key Diagrams: The Waterfall (who gets paid, in order) · The Sale Process Funnel (teaser → close)
References
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