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Selling a business is often the most significant financial and emotional event of a founder’s life. After spending years or decades nurturing a company, taking it to market can feel like marrying off a family member—you want to ensure it ends up in the right hands.
Yet, many business owners enter the mergers and acquisitions (M&A) market unprepared for the reality of private equity and institutional buyers.
In a recent episode of The Exit, host Steve McGarry sat down with Matt Bradbury, Managing Director at Business Acquisition & Merger Associates (BAMA). With over 21 years of experience facilitating hundreds of millions of dollars in middle-market transactions, Matt shared an insider’s view on how founders can protect their legacy, maximize valuation, and avoid costly exit traps.
1. Beware of the M&A Spectrum: Not All Buyers Are Created Equal
Many founders assume that selling a business comes down strictly to finding the highest bidder. However, price is only one component of a successful transaction.
According to Matt, the private equity (PE) landscape falls across a wide spectrum:
- The Top 15%: Exceptional partners who are humble, collaborative, and recognize that management must drive post-acquisition growth.
- The Middle 10%: Safe, reliable buyers where the seller won’t get hurt.
- The Remaining 75%: Aggressive buyers who often attempt to push founders around, overhaul company culture, or aggressively alter terms during due diligence.
“Too often, sellers think it’s only about price,” Matt notes. “Price is critical, but so is finding a buyer who won’t turn your business and your employees’ lives into a train wreck after closing.”
2. Exit Timing: “The Trend Is Your Friend”
When is the right time to sell? While personal readiness matters, market perception of your financial momentum dictates valuation.
If a company is coming off a three-year upward trend with 5% to 10% annual revenue growth and steady or expanding margins, it will command a premium multiple. Conversely, bringing a business to market during a flat period or a 5% decline exposes the seller to aggressive price chipping.
Founders must also stay mindful of broader economic cycles. Sitting on high earnings during a multi-year growth streak can be tempting, but waiting too long risks running into an industry downturn—forcing a founder to hold for another four to five years just to recover.
3. Clean Financials & Safe Ad-Backs
Preparing a business for sale requires presenting financial statements that clearly reflect true gross profitability. A common mistake accountants make is misallocating fixed overhead costs (like rent or utilities) into Cost of Goods Sold (COGS) rather than direct labor and materials, obscuring actual incremental margins.
Additionally, sellers must be cautious with discretionary add-backs:
- Safe Threshold: Legitimate, verifiable ad-backs should generally not exceed 10% to 15% of EBITDA.
- Red Flag: Pushing $500k to $1M in questionable add-backs onto a $2M EBITDA business signals a lack of financial integrity to buyers.
4. Front-Load Bad News to Protect Trust
Due diligence is fundamentally an exercise in trust. Every business running for 10, 20, or 30 years has a few blemishes in its past—whether an environmental issue, past litigation, or a historic bankruptcy.
Hiding these details is one of the fastest ways to kill a deal. When undisclosed issues emerge during background checks or Quality of Earnings (QofE) reviews, buyers lose confidence and retrade on price.
By disclosing historical hiccups upfront, sellers manage the narrative, frame the remedy, and build immense credibility with prospective acquirers.
5. Watch Out for the “Fish and Chip” Retrade Strategy
A common tactic among predatory buyers is the “fish and chip” method: fish with a high initial Letter of Intent (LOI) to tie the business up in exclusivity, then chip away at the price during due diligence once the seller is mentally exhausted.
Matt emphasizes the importance of vetting a buyer’s track record before signing an LOI:
- Ask how frequently the buyer closes strictly on the original terms of their LOI.
- Demand justification for any proposed purchase price adjustments.
- Maintain a firm stance against arbitrary price cuts or last-minute seller-financing demands.
6. Hire a Specialized M&A Attorney (Not a General Practitioner)
One of the costliest mistakes a business owner can make is using a general corporate lawyer, real estate attorney, or family friend for an M&A transaction.
M&A law requires specialized expertise. An experienced M&A attorney understands standard deal structures, knows which buyer indemnifications to reject, and prevents clawback risks five years down the road.
“It’s like brain surgery,” notes host Steve McGarry. “You don’t want a general practitioner operating on your brain; you want a specialized surgeon.”
Final Takeaway
Exiting a business successfully requires strategic planning, disciplined financial presentation, and experienced guidance. By running a clean process, disclosing potential hurdles early, and choosing the right buyer, founders can protect their legacy and secure maximum value for their life’s work.
Condolences Note: This episode was recorded prior to the passing of our guest, Matt Bradbury. We are honored to share this conversation and extend our heartfelt condolences to Matt’s family, friends, colleagues, and all those who knew him.
