Rules of Thumb

Key Principle

Portable heuristics for a once-in-a-lifetime sale, where the seller is the least-experienced party in the room. The throughline: money is rarely the reason to sell, terms and buyer character beat headline price, and honesty disclosed early is the deal's real currency.

Rules of Thumb by Theme

Deciding to Sell

Decide the why before the how — a misdiagnosed motivation builds the wrong deal; price, timing, buyer, and structure all flow from it. (Do You Actually Want to Sell?)
Money is not a reason to sell — "You'll almost always do better financially, assuming the company continues to perform, by not selling your company." A sale trades an indefinite earning stream for finite, partly-deferred proceeds. (Do You Actually Want to Sell?)
There are seven legitimate motivations — personality/skills, exhaustion, freedom, health, obligations, risk, legacy. Notice none is money. (Do You Actually Want to Sell?)
Match structure to motivation: a legacy seller optimizes for buyer character; a risk-driven seller can take a partial sale; an exhausted seller needs a clean exit.
You can de-risk without fully exiting — concentrated wealth in one illiquid asset can be partially cashed out (sets up the majority recap / "second bite").
"Timing the sale" is fool's gold — trying to top-tick a cycle "will be obvious and you'll select for a group of buyers that will likely create challenges for you and your employees." (Do You Actually Want to Sell?)
Doing nothing is itself a high-risk choice — no plan means heirs "clean up the mess," the company goes rudderless, and the best customers and employees jump ship. (Do You Actually Want to Sell?)
"What got you here won't get you there" — when the firm needs talents you can't supply, you have become the constraint, and that is a valid reason to transition. (Do You Actually Want to Sell?)
If you can answer the Purposeful-Path prompts (cash range, years willing to stay, post-sale role, ideal buyer, timeline, % to sell, non-financial goals), you're "way ahead of most owners"; if you can't, you aren't ready for the market.

Honesty & Disclosure

You never choose whether a flaw is seen, only when — diligence is a "professional colonoscopy" that finds everything.
The same fact disclosed early reads as a managed, priced risk; discovered late it reads as concealment and triggers a re-trade or a walk at the moment of maximum sunk cost.
"If you start with the truth, warts and all, the odds of success rise dramatically." (Deals Die All the Time)
"Hiding flaws or skewing the presentation of numbers will only delay the inevitable." (Deals Die All the Time)
"The best way to handle hard truths is head-on and early in the process." (Deals Die All the Time)
Self-audit and inventory the "skeletons" before going to market, so disclosure is a choice you make, not a discovery the buyer makes.
Owner reliance is the single biggest killer — "The more reliant on ownership, the lower the purchase price and likelihood of sale." (Owner Reliance)
"The more people who need to check off on a transaction, the higher the likelihood of failure" — resolve liens, suits, and misclassifications pre-sale to remove veto-holders from the closing path. (Liens)
Off-the-books activity is simply disqualifying — "No reputable buyer is going to be comfortable with suppliers being paid in cash, or your bookie being employed as a consultant." (Off-The-Books)
Settle small lawsuits before sale — buyers won't inherit a fight, and litigation adds external approvers.
Non-business skeletons (divorce, silent debt holders, arrests) are almost all survivable if proactively disclosed; "Buyers are people, too." (Deals Die All the Time)
One caught lie poisons everything — once a seller is caught in a single half-truth or omission, "everything else becomes a little more suspect." (Behind the Curtain)

Reading Buyers

Buyer character ≥ buyer's checkbook — because so much consideration is deferred and discretionary, who the buyer is decides whether you actually get paid.
"Be a seller that attracts a great buyer" (Munger, applied: "How do you get a good spouse? Deserve it.") — trickery selects for bad-faith buyers. (Do You Actually Want to Sell?)
The more casually an offer is made, the less seriously you should take it — a real bid requires sunk effort like a 4–8 hour site visit. (Doing a Deal)
Read the IOI for what's missing, not the top number — vague binding details signal a fishing expedition or a buyer who can't deliver.
A rejection is usually base-rate noise, not a verdict — "a pass is not necessarily a judgment on the quality of your company." (Doing a Deal)
Fundless/independent sponsors carry closing risk — they have no committed capital; only ~1 in 10 deals close after a signed LOI vs. ~1 in 4 generally.
PE funds run many deals at once expecting most to die — "time is the enemy of all deals," so find out if you're a "fifth-string candidate" before sinking in effort.
Your PE buyer is structurally temporary — a ~10-year fund life forces an exit in 2–4 years; plan for who owns you next.
Get an NDA signed before disclosing much to a strategic (often a competitor), so proprietary information doesn't leak to a rival who may never buy.
Always ask a buyer how many of their last 5–10 LOIs closed and why the others died — it converts close-rate statistics into this buyer's track record.

Valuation & the Waterfall

Valuation is not "How much?" — what matters is "the amount, timing, and probability of cash." (Doing a Deal)
"Beware of the headline number. The devil is in the details." (Math, Explained)
Two identical headlines can hide wildly different economics — $10M all-cash beats $10M split into debt, seller note, earnout, and equity.
Proceeds pay out by priority, not proportionally — "Debt 'eats' before equity, senior debt eats before subordinated debt, and preferred equity eats before common equity." (Doing a Deal)
Liquidation preferences are the hidden multiplier — compounding preferred dividends "automatically dilute other owners," are "rarely disclosed," and can leave a 20% common holder with a fraction of the headline.
Valuation is a multiple of "something," and the something is negotiable — normalize earnings: add back one-time costs, strip one-time revenue, because the multiple amplifies every base dollar. "The trick is to determine what counts and why." (Doing a Deal)
Multiples rise with size — bigger, less owner-dependent firms are scarcer and lower-risk (SDE-priced small firms at the bottom of the range, EBITDA-priced larger firms at the top).
A real buyer's number beats a purchased appraisal — "something is only worth what someone else is willing to pay." (Doing a Deal)
Price is tied to adjusted TTM, and deals take 6–18 months — you carry performance risk through a long closing window.
"Cash flow is king" — measure profitability by distributable "beer money," not paper profit a buyer can't take out.
If the asset base needed to generate profits is worth 20–30X those profits, the firm may not be sellable as a business.

Deal Terms

"You set the price and I'll set the terms" — whoever controls structure controls the real money. (Doing a Deal)
Caps and baskets bound both sides — the cap is the seller's max clawback; the basket is the buyer's deductible. A tipping basket is strictly worse than a deductible basket (recovery from dollar one once tripped).
The source of repayment decides whether a cap is real — escrow, offset rights against your seller note/earnout, or guarantees; offset rights couple indemnification disputes to your deferred pay.
Earnouts and seller notes force you to "put your money where your mouth is" — sellers always hold superior knowledge, so deferred structure aligns interests, but it makes payout contingent on the buyer's good faith.
Hold operating real estate apart from the business — different risk/return profiles, so most buyers want to lease, not buy; anchor on an FMV appraisal.
For real estate with a purchase option, value = net annual NNN rent ÷ cap rate (e.g., $360K / 0.09 = $4M); seller wants a low cap rate and long NNN lease, buyer the opposite.
Every salary dollar you pay yourself post-close cuts proceeds by the multiple — pay yourself what the role is genuinely worth; under-paying inflates earnings on work that still has to be done.
Expect a non-compete/non-solicit — it protects the goodwill and relationships already priced into the deal.
The "second bite of the apple" is a promise, not a guarantee — it needs the company to grow, a future buyer to exist, and your spot in the capital stack to survive the waterfall.

Advisors & Fees

Don't ask "should I hire a broker?" — decompose the sale into functions (buyer sourcing, history gathering, negotiation, emotional regulation, deal momentum, go-to advisor) and ask who owns each. "Ultimately, someone has to do the work."
The functions you genuinely can't cover define what you actually need to buy — "They should fit you and not the other way around."
Default toward hiring because of inexperience itself — "The sale process is much harder than you expect, even taking into account that you expect it to be hard."
Budget the real load — ~500 business decisions and an estimated 20–40 extra hours/week for months; an owner who underestimates it neglects the business and kills value during diligence.
Pay should be success-based — if their fee "does not depend heavily or exclusively on selling the company, I would question what you are paying for."
An intermediary who offers only compliments can't market the business — "Your business isn't flawless."
If an advisor suggests hiding or manipulating information, "run. Run fast." — even "just until we get under LOI."
Avoid size mismatch — don't be the whale, the minnow, or the firm's first-ever deal.
"A man who carries a cat by the tail learns something he can learn in no other way" (Twain) — transaction experience is irreplaceable; that's the strongest reason to hire.

The Process

"Price aside, do I care who buys my business? If not, an open auction will likely produce the highest price." — caring about who shrinks the buyer pool and sacrifices competitive bidding. (Doing a Deal)
A teaser is a "30-second elevator pitch" — shareable and non-confidential, designed to induce an NDA or self-selection.
Put the sorting information up front — state what you're looking for (minority vs. 100% sale, what kind of partner); the recurring failure is burying it.
Frame a down year on the response, not the dip — "Great organizations still face tough times. They are just adept at responding to them well."
"Accuracy is the objective. And if you adjust away from accuracy too much, you will lose investors' interest." — aggressive add-backs read as manipulated earning power.
Include a Statement of Cash Flow and explain the balance sheet — both are usually under-explained and earn credibility automatically.
Split capex into maintenance vs. growth — it isolates the true cost of staying in business that headline EBITDA hides.
The first management call "feels a lot like a first date" — 30–60 minutes, and chemistry should be obvious by the end.
The LOI is the gate, not the finish line — "a promise to agree to transact on the terms specified if the facts check out." (Doing a Deal)
Going under LOI without telling other interested buyers "will likely burn the bridge" — you may need them, since >75% of deals die after the LOI.

Negotiation

Revisit your reasons for selling first — negotiation tactics are downstream of what "winning" was defined as.
The buyer moves first with a rough range and expects a counter; the opening offer's emotional jolt is just expectation-vs-reality noise.
Don't fixate on the largest numbers you've ever seen — "structure and terms are equally important."
With a qualified, trustworthy buyer, leverage their structuring expertise — state your priorities and risks and let them propose structures — but "always approach a proposed solution with open-minded skepticism."
The LOI is an irreversible leverage handoff — exclusivity ends every other conversation, so the headline number is worthless if the buyer retrades once you're locked in.
Re-trading defense is to vet the track record before signing — but not all re-pricing is bad faith; genuinely surprising facts can justify a real change.

Due Diligence

Diligence "helps a buyer, who can't know as much as you do about your business, confidently take risk." (Doing a Deal) — its job is building shared reality.
"The buyer needs to see what you know in words and numbers" — translate tacit, gut knowledge into verifiable documentation. (Behind the Curtain)
Verify the buyer can fund the close before granting exclusivity — scale proof to how internal the capital is (statements for SBA/individual buyers, written investor interest for sponsors).
"Each deal is won and lost at least three times during due diligence." (Doing a Deal) — expect setbacks, not a straight line.
Don't hide the sale from accounting, finance, and HR leaders — doing so forces the owner to assemble everything alone and makes the firm look un-standalone.
Prepare documents in advance — gaps create both friction and suspicion.
Emotional friction is universal — "without exception" the seller finds questions insulting and the buyer finds the seller slow; "keep your head, be rational, and be slow to anger." (Behind the Curtain)
Forecasts are read as a signal of seller expectations, not as value — a slow-grower that "doubles on a change of ownership" isn't credible.

Post-Close

Pick a reasonable and good-natured buyer — much of your consideration is deferred and discretionary, so their character is what pays it out.
Expect a "new normal" — more work, a new partner or boss, and seller's remorse are near-inevitable, not signs the deal was wrong.
The business must be able to stand on its own — standalone viability is the recurring test of whether you've built something sellable and survivable.

A Few in the Author's Words

"You'll almost always do better financially, assuming the company continues to perform, by not selling your company. It's counterintuitive, but correct." — Brent Beshore, (Do You Actually Want to Sell?)

"If you start with the truth, warts and all, the odds of success rise dramatically." — Brent Beshore, (Deals Die All the Time)

"You set the price and I'll set the terms." — Brent Beshore, (Doing a Deal: Selling Your Business)

"Beware of the headline number. The devil is in the details." — Brent Beshore, (Math, Explained)