The Number One Thing Business Owners Forget to Check Before Selling

If you walk away from your business, could you still retire? Answer that before you get into the sale process.

We currently have six clients in some stage of selling their business. That is unusual for a firm our size, and the reasons are consistent. The economy has cooperated, buyer pricing has been reasonable, and after years of carrying the whole operation, the lifestyle these owners want no longer matches the job they have.

Every one of them has felt the same pressure: the belief that they must get the highest possible number.

Key takeaway

Most owners prepare for a sale by trying to maximize the headline price. The one thing they forget to check is simpler and can be more important: whether they could walk away from the business tomorrow, never sell it, and still fund retirement. Owners who know that answer negotiate from calm strength, knowing their situation doesn't depend on the highest price. Owners who do not are quietly negotiating under more pressure.

Where the pressure comes from

Owners read about valuations. In dentistry, published 2026 ranges run from roughly 5x adjusted EBITDA for smaller single-location practices up to 10x or more for platform-scale groups. Similar headline ranges circulate in accounting, IT services, and other professional service niches.

Let's say it together "EBITDA is not an standard metric".  The organization that defines public accounting standards (GAAP) doesn't have a standard formula for EBITDA.  It's a unique measurement normally based on the industry.  Sure, you can use EBITDA measures to approximate value but dig into the valuation report to understand true cash flows and the underlying assumptions.

So, a colleague across town sells and talks about their EBITDA multiple and the number becomes a benchmark in everyone's mind. If they got that, I should get that.

The problem is that headline numbers are not proceeds. A comparable multiple is not a valuation, either. If you have not gone through the exercise, start with how to value a business before you sell so you are working from your own normalized earnings rather than someone else's number.

The headline price is not the deal

Private equity backed buyers often win on price because they are not really offering price alone. Common structures include:

• Cash at close of roughly 60 to 75 percent of the stated offer, not 100 percent
• Rollover equity of 15 to 30 percent, reinvested into the buyer's holding company and illiquid until that company itself sells, which may be three to seven years out
• An earnout tied to maintaining post close earnings, typically over 12 to 36 months
• An employment or production agreement requiring you to keep working, often at a reduced compensation rate that is itself funding part of the purchase price
• An escrow holdback against representation and warranty claims

Rollover equity deserves particular scrutiny. It is a private, illiquid, single company position, and it carries the risks we describe in our overview of investing in private markets: no daily pricing, no exit on your timeline, and a return that depends entirely on the sponsor's next transaction.

The highest offer on the table may be the one that gives you the least cash, the longest work commitment, and the most uncertainty. A 9x offer with 60 percent cash at close and a three-year work requirement can easily be worth less to you, after tax and after risk, than a 6.5x all cash sale where you are free in ninety days.

The check people forget to run before selling

Before you compare offers, answer this question:

If I closed the doors and walked away with zero sale proceeds, could I still retire on the terms I want?

Our firm builds plans based on that assumption. Our financial planning process projects retirement funding using personal assets, retirement accounts, real estate, and outside income. We set savings goals so the business sale is treated as upside rather than as the plan. The business is the engine that funds the savings, not the pension itself.

That is why the retirement plan you sponsor for yourself and your employees matters more than most owners think. Every year you fund it is a year you reduce your dependence on the sale. And if you are considering leaving before 65, the gap between retirement and Medicare is a real line item that belongs in the projection.

Consider two owners, both with a practice worth about $2 million.

Owner A has $600,000 in retirement accounts and needs roughly $180,000 a year in retirement. Without a sale, the plan does not work. Every negotiating decision is now downstream of that gap.

Owner B has $2.4 million in personal investments and the same spending need. The sale would improve the plan meaningfully, but it is not the plan. Owner B can decline a structure she does not like or negotiate a better deal. 

Same asset. Completely different negotiating position.

What that position actually buys you

The six owners we are working with know their numbers before they walk into the room. That knowledge changes what they can insist on:

• Time. They can refuse a three-year associate agreement because they are not trapped into earning the back end of their own purchase price.
• Structure. They can push for more cash at close 
• Employees. They can make staff retention a priority.  For some owners, an internal transition is the better answer, which is why we often start by discussing ownership with an associate long before an outside buyer appears.
• Their pace. They can walk away from a bad deal and keep operating. That is the single most valuable piece of leverage in any transaction.

Buyers negotiate differently with a seller who has options.

Common mistakes

1. Anchoring to someone else's multiple. Their practice, market, payer mix, and associate depth are not yours.
2. Comparing offers on headline price instead of after tax cash at close plus risk adjusted contingent value. Allocation, entity structure, and the tax character of each component change the answer materially, which is why tax planning is critical during the negotiation and not after it.
3. Treating rollover equity as cash. It is a concentrated, illiquid, single company investment in a leveraged business you no longer control.
4. Downplaying the work requirement. A two or three year commitment at reduced pay from owner compensation is a real cost, financially and personally.
5. Having no plan for the proceeds. A large one time liquidity event needs an investment strategy and usually an estate structure decided in advance, not determined after closing.

Practical action steps

• Run a retirement projection that assumes no sale proceeds. Find out what percentage of your plan the business is actually carrying.
• Set personal savings targets early and fund them consistently while the business is strong.
• Model each offer three ways: after tax cash at close only, plus earnout at 50 percent probability, plus rollover at zero.
• Decide in advance how long you are willing to keep working, and treat that as a term you are pricing, not a concession.
• Strengthen the operating business in the years before a sale. Better margins, less owner dependence, and cleaner reporting improve both your value and your option to keep it, and that is much of what our business consulting work is for.
• Coordinate the analysis across your financial advisor, CPA, and attorney before a letter of intent is signed, not after.

Conclusion

The number one thing owners forget to check is not a valuation input. It is their own balance sheet. Before you sell, understand what your retirement looks like if you never sell at all.

It is completely fine if the answer is that you are not fully funded without the business. Most owners are not. But knowing that in advance lets you plan around it deliberately, over several years, rather than dealing with it during a sale.  

The best sale outcomes we see do not come from the highest offer. They come from owners that planned, saved, and invested to put themselves in a strong personal financial position before getting to the sale. 

We do this work for dental practice owners and owner-operated B2B service firms, coordinating planning, tax, and investment decisions under one roof. If you are within a few years of a possible transition, see how our process works and let's model your post sale position before you take a call from a buyer.

Disclosure

The content and information presented herein are for educational purposes only and should not be construed as a solicitation or offer to buy or sell any investment services. Nothing contained in this material should be considered an offer to provide any product or service in any jurisdiction that would be unlawful under the securities laws of that jurisdiction. The information contained herein has been obtained from sources believed to be reliable; however, the Firm does not guarantee accuracy or completeness of the information. Such information is subject to change at any time without notice. Before taking any action, you should consult with a qualified tax, legal, or financial professional.