Selling a small or midsize company is less like selling your house and more like selling your car. Except you have to imagine that you and the buyer are in the same car and about to change drivers like you’re in the middle of a Fast & Furious chase. If you were to perform this stunt, I’m willing to bet you wouldn’t want to wing it. Instead, you’d want to plan as far ahead as you could about everything you could imagine. How fast should we be going? What road should we be on? Does it really make sense to do all this while dragging an entire bank vault through the streets of Rio de Janeiro? Point is, you’ll need to be prepared. This concept came through again and again in a conversation with Alexandria Seydel, an M&A attorney turned business exit strategist. After meeting countless owners at the LOI stage, she realized how much value sellers were leaving on the table by not planning ahead. That realization led her to build Ripples Edge Advisors, a firm focused entirely on helping owners prepare for an eventual exit. In our talk, Alex shared some of what she does to help owners capture the most value for their businesses when they sell. Look at me, I’m the captain now In many small businesses, the owner holds a surprising amount of knowledge in their head. It can be anything from sales relationships to operational decisions. The level of owner dependence is a huge factor in determining how well a business will transition. Alex likes to test this with a simple question. If the owner booked a three-week trip to Europe, “what parts would break” and “what parts would need you to log in in the middle of the night.” From there, she and her partner begin to dive into these bottlenecks. Sometimes that means observing sales calls to see what goes on. “We’ll ask to be a fly on the wall,” she said, because owners often underestimate how central they still are to daily operations. If they found that a sales lead was not strong enough, her partner would coach them into the role or help the owner hire someone who can grow into it. There are plenty of quick fixes like this, but without understanding the role of the owner, it’s easy for them to fly under the radar. Slow and steady wins the race The changes that move valuation happen slowly. Alex’s ideal planning window is two to five years. Within that time frame, an owner can address issues like client concentration, build up a leadership bench, formalize and document processes, and more to ultimately create something a buyer can step into. For example, if 70% of the revenue is coming from three clients, Alex might redirect some energy toward mid-sized customers to smooth out risk in a way buyers care about. In terms of operations, Alex and her team will map what really happens when a customer signs. Who touches what. What tools are used. Where undocumented shortcuts hide. Every owner believes they have a good way of doing things that works. What they really have is experience. And experience does not transfer when the deal closes. Setting up all your operations to be transferable is a manual process that is going to take time. By contrast, a short timeline limits almost everything. Alex believes there are very few tweaks an owner can make in a few months that will have a true impact on valuation. You know what happens when you assume? Much of Alex’s work has to do with challenging assumptions. Owners often assume they can exit quickly. So by the time they seek help, they’re burned out, which usually means the numbers have softened. On the other hand, a lot of buyers expect sellers to stick around for about a year after the transaction. (If you want to learn more about keeping sellers in the game, read this article on our QoE Challenge service). These mismatched expectations are why Alex says her job “is just to ask questions and to poke holes in your assumptions and help see around the corners you don’t even know you’re not looking around.” This mindset of hers extends to understanding the seller’s and buyer’s motivations. A sale works best when the owner’s values line up with the buyer’s motivations. Some owners care about legacy and their team. Some just want top dollar and a clean break. Matching these goals with the right buyer depends on priorities. Are you focused on just the economics of the deal? Private equity might be the answer. Do you want your product and team to stay the same? Find a strategic buyer. Do you want the new owner to have personal stewardship? Try talking to ETA buyers. In some cases, you can even hand over your company to the employees through an ESOP. Working backward from what the owner wants life to look like after the sale helps determine which buyer to prepare for. Putting the “prep” in QOE Prep Like I said in the beginning, when you sell your company, you’re handing over a living, breathing asset. The owners who get the best outcomes are the ones who start early. They figure out how to set up reliable processes so that someone else can pick it up and keep going. An essential part of this prepping process is getting due diligence you can trust. When you commission a quality of earnings report from us, you can rest assured that it will be completed on time and will be packed with insights to help you navigate the transaction process. If you’re interested in learning more, check out our website to set up a call with me.