An Operator's Perspective On Selling

I purchased five and some change years ago. I've been operating ever since. So I know what it's like to search but also have it firm in my mind how I'd think through an exit. Here's what I hope searchers understand from the perspective of an operator considering selling (though I personally have no desire to sell right now). 1) If the seller has operated a fundamentally good business, no amount of money is going to materially change their life. Someone could offer me $50MM for my companies tomorrow. What am I gonna do with the money that I haven't already done with the money I've been making up to this point? If someone has a good business, the company throws off cash while operating and the seller doesn't really have a good sense of what to do with it. That doesn't mean that if there is a bunch of cash or liquid assets, it's automatically a good business. But it does mean that's a very encouraging sign. 2) If the seller sells to you, they have to find a decent place to put the capital. If you had something for 20 years that puts off $1MM a year and you sell it for 5x, you may get taxed 20% of that if you're lucky and now you have to find an investment that returns $1MM per year on a $4MM purchase price in order to keep up. This means that a base financial level it doesn't really make much sense to sell in most cases. There are exceptions to this. For example, if someone took advantage of QSBS, then selling could make a lot more sense but they'd still have to find a place to allocate the capital and stay ahead of inflation. Another example is if the company has grown so huge that the tax impact is an afterthought to the seller. 3) Life and family reasons are the best reasons to sell a business. Money is not a good reason to sell or operate. The dollar is an awful master to serve as happiness and fulfillment is always fleeting from those who do. Really people will most often sell because of life reasons. Maybe they want to retire and move to Costa Rica. Maybe they want to travel more and play with their grandkids. Maybe they no longer like the people in their company but are convinced that replacing them is too risky. Maybe their spouse is already retired and pressuring them to sell. Maybe they need to sell for health reasons. If you think someone is trying to sell because of the money or if your main selling point is the money, then you're almost inviting them to scam you or to go for a higher bidder. Likewise you shouldn't be buying a business just because you want to make a lot of money; money is deceitful and you're kinda scamming yourself from the outset if you do. Rather, buy a small business if you want entrepreneurship to grow you into the best version of yourself. It absolutely will try to do that and make you face very uncomfortable truths about yourself that you've avoided for years. This whole operating thing is an exercise in unpacking and resolving childhood issues both within yourself and your staff. It grows you up or your business plateaus. My point in all this is this: sellers of good businesses aren't only going to sell because of the money. They more than likely want to leave the company in really good hands, make sure their people who are like family to them are taken care of, and get a fair price and terms. So you don't actually have to pay 5 times published SDE for the right business with a personal guarantee on the debt. Be patient. Be persistent. Make your offers quickly. Think holistically about this whole process and you'll likely get there.