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For many entrepreneurs, the ultimate goal isn’t just running a business, it’s successfully exiting one. But the gap between wanting to sell and signing the closing documents is often filled with complex hurdles, emotional negotiations, and rigorous due diligence.
In this week’s episode, we sat down with Gregory Kovsky, President and CEO of IBA (International Business Associates). As the head of the oldest and largest business brokerage firm in the Pacific Northwest, Gregory has facilitated thousands of transactions over the last 25 years.
Whether you are looking to retire next year or are just building your five-year exit roadmap, Gregory’s insights on valuation, timing, and deal structure are essential reading.
Here are the top takeaways from our conversation on how to master the art of the exit.
1. The “Four Sales” Theory
Most founders assume that selling a business involves one major hurdle: convincing a buyer to say “yes.” According to Gregory, that is a dangerous oversimplification. To successfully close a deal, you actually have to complete four distinct sales:
- The Buyer: This is often the easiest sale. They are emotional, excited about the opportunity, and ready to take the reins.
- The CPA/CFO: Once the buyer is on board, they hand the deal to their accountant. The accountant doesn’t care about the vision; they care about the numbers. If the financials don’t make sense, they will give a “thumbs down.”
- The Attorney: Lawyers aren’t looking at price; they are looking at liability. If they perceive too much risk in the contracts or history, they will kill the deal to protect their client.
- The Bank: Finally, you must sell the lender. Banks follow the Golden Rule: He who has the gold makes the rules. If the debt service coverage ratio doesn’t work, the funding vanishes.
The Takeaway: You need a transaction team (broker, attorney, CPA) that speaks the specific language of all four of these stakeholders.
2. Timing Is Everything: The Two M&A Seasons
Is there a “right time” to sell? While every business is unique, Gregory notes that M&A activity follows a distinct seasonal rhythm.
- Primary Season (January – June): This is the golden window. Why? Because most companies have just closed their books. The “ink is still wet” on the tax returns, meaning buyers and banks have access to fresh, verifiable data. This creates the highest confidence in valuation.
- Secondary Season (Labor Day – Thanksgiving): Business picks up again after the summer lull. Everyone is “back to school” and ready to work before the holidays.
When NOT to Sell: July, August, and December are notoriously slow. Decision-makers are on vacation, and as Gregory puts it, “Not many people put a business under the Christmas tree.”
3. How to Maximize Your Valuation
We all hear about “multiples”—selling for 4x, 5x, or 7x EBITDA. But how do you actually move that number up? Gregory explains that valuation is fundamentally about diminishing risk.
To increase your multiple, you need to professionalize the business before you go to market:
- Curb Appeal: If you run a manufacturing plant, clean up the scrap yard. If you’re digital, refresh your antiquated website. You only get one first impression.
- Documentation: Do you have an employee manual? Do you have Standard Operating Procedures (SOPs)? These prove the business can survive without you.
- Contracts vs. Handshakes: A handshake agreement with a top client is risky. A 5-year contract is an asset. Paperwork adds value.
The Marathon Mindset
A common mistake founders make is taking their foot off the gas once they decide to sell.
“Look at it like you’re running a marathon and you’ve got two miles left,” says Gregory. “Push your sales. Push your promotion.”
If you can walk into a due diligence meeting and announce a new contract you just signed, it proves you aren’t asleep at the wheel. If revenue dips because you’re “mentally checked out,” buyers will smell blood in the water and lower their offer.
4. The Fatal Mistake: Hiding the Truth
When asked about the biggest deal-killer, Gregory didn’t hesitate: Failure to disclose material facts.
If you know a competitor (like a Starbucks) is opening across the street from your coffee shop and you don’t tell the buyer, you are setting yourself up for a lawsuit.
Radical transparency is your safe harbor. If you disclose the warts, the risks, and the customer concentration issues upfront, the buyer enters the deal with eyes wide open. If the business struggles later, they can’t claim you misled them.
5. Building the Right Team
You cannot DIY a multimillion-dollar exit. Gregory emphasizes the importance of surrounding yourself with experts who have “been there, done that.”
- The Broker: Look for a firm with tribal knowledge—one that has seen every variation of a deal structure.
- The Attorney: You need a transaction lawyer who knows what is “market standard” for indemnification and reps & warranties, so they don’t waste time fighting over standard clauses.
- The Successor: Look for a buyer with relevant experience. The SBA often requires it, and for good reason—you want to hand the keys to someone who can actually drive the car.
Personal &/or Company Bio:
Gregory Kovsky is the President & CEO of IBA (International Business Associates), the Pacific Northwest’s oldest and largest business brokerage firm. Mr. Kovsky has successfully negotiated the purchase & sale of over 300 privately held companies and family businesses in Washington, Oregon, Alaska, California, North Carolina, and Massachusetts since joining IBA as a mergers & acquisitions intermediary in 1994. He has successfully facilitated transactions involving manufacturing & distribution companies, industrial, marine, and automotive businesses, technology & software companies, and service, education, and retail businesses. A commercial real estate professional for over 30 years, Mr. Kovsky commonly provides his clients with comprehensive representation in selling a business and the associated real estate.
LinkedIn – https://www.linkedin.com/in/gregory-kovsky-460aab7/
