In my practice, I regularly encounter entrepreneurs who have known for years that they want to sell their business, but don’t really start the process until the need becomes urgent—whether it’s a serious buyer coming forward, a change in health, or simply an age limit coming into view. And then it turns out: the business isn’t ready.
That’s not a criticism. It’s a pattern. And it’s costly.
Growth through acquisitions—a hidden risk
A strategy I’m seeing more and more often: entrepreneurs acquiring smaller businesses to grow their EBITDA and thereby create a more attractive sales profile. Smart in itself—but what’s often underestimated is that the contracts from those acquisitions later become part of their own due diligence process.
An entrepreneur I was advising had acquired three smaller businesses over the years. The transactions were handled relatively informally: customer contracts were confirmed verbally or by email, employees remained on their original terms of employment, and acquisition agreements were only briefly documented. At the time of the acquisitions, that didn’t seem to be a problem. EBITDA was growing, and the market position was strengthening.
That is, until he wanted to sell himself. A buyer initiated due diligence and requested the legal documentation for all customer relationships, employment contracts, and acquisition agreements. What followed was a lengthy recovery process—resulting in a downward adjustment of the purchase price.
What you can do right now
Treat every acquisition you make as if you yourself will one day be the seller. Ensure that customer contracts are in writing, up to date, and transferable. Document employment-related agreements. And keep acquisition agreements in a safe place; a buyer wants to know what you purchased, at what price, and under what terms.
Preparation doesn’t start six months before the sale, but at least two to three years in advance.
The bottom line
A buyer buys a business with a sound legal structure and manageable risks, including everything you’ve taken on yourself. The better you can demonstrate this, the stronger your negotiating position will be.
“I want to sell someday” is an intention. Preparation turns it into a strategy.
