Why Most Firms Are Not Sellable
Lessons from My Journey
Over the years, I’ve built, scaled, and sold multiple businesses, and one thing has become crystal clear: not every company is sellable. In fact, most aren’t. I’ve seen firsthand how even promising firms with talented teams and innovative ideas can fail to attract buyers. The reason? Buyers don’t want a puzzle to solve; they want a business that’s ready to grow. Here’s what I’ve learned about why firms fail to sell—and how you can prepare yours to stand out.
Hard Lessons from the Trenches
1. Overreliance on Founders
In my early days as a founder, I made the mistake of being too involved in everything. While that helped drive growth initially, it also created dependency. Buyers don’t want a business that collapses the moment the founder steps away.
What I Did:
I invested in building strong leadership teams that could operate independently.
I documented processes and empowered decision-makers, ensuring the business thrived without me.
2. Inconsistent Revenue Streams
One of the biggest hurdles I faced was shifting from project-based revenue to something predictable. Buyers want stability—a business they can count on for consistent returns.
What Worked for Me:
I transitioned to Monthly Recurring Revenue (MRR) models by creating subscription-based services.
I developed long-term retainer agreements with clients, ensuring steady cash flow.
3. Narrow Focus
Early on, one of my businesses relied heavily on a single major client. While that relationship was lucrative, it made the business vulnerable. Buyers saw it as a risk, and I had to diversify to make the company attractive.
How I Fixed It:
I expanded into new industries and diversified the client portfolio.
I balanced revenue streams to reduce dependency on any single source.
4. Lack of Differentiation
In a crowded market, blending in is a death sentence. I learned that the hard way when one of my businesses struggled to stand out from competitors.
My Approach:
I focused on defining a clear Unique Value Proposition (UVP).
Whether through proprietary tools or specialized expertise, I made it clear why my firm was different.
5. Weak Financial Performance
Profitability matters. In my experience, buyers zero in on EBITDA and margins. If your financials are shaky, it’s a dealbreaker.
What I Focused On:
I conducted financial audits and streamlined operations to boost profitability.
I worked on achieving consistent, strong margins to make the business attractive.
6. Overlooking Intellectual Property (IP)
One mistake I see often—and have made myself—is undervaluing IP. Buyers place a premium on proprietary assets, and neglecting this can hurt valuation.
My Takeaway:
I invested in securing trademarks and patents.
I documented proprietary tools and processes to showcase unique value.
7. No Clear Exit Strategy
In the past, I’ve seen businesses scramble to prepare for an acquisition opportunity, only to miss out because they weren’t ready. Preparation is everything.
What I Learned:
I started planning my exits early, aligning operations, financials, and teams with buyer expectations.
Having a roadmap made transitions smoother and more profitable.
What Buyers Want—From My Experience
Acquirers look for businesses that are:
Scalable: Systems and teams in place to handle growth without chaos.
Predictable: Stable revenue streams with minimal variability.
Distinctive: A clear UVP and market position that stands out.
Independent: Leadership teams that can operate without the founder.
Protected: Valuable IP that creates barriers to entry for competitors.
My Playbook for a Sellable Business
Audit Your Business:
Identify operational, financial, and strategic gaps.
Focus on Recurring Revenue:
Build predictable income streams to appeal to buyers.
Diversify Smartly:
Spread risk by diversifying clients, industries, and revenue sources.
Think Like a Buyer:
Address the red flags that would deter you if you were acquiring the business.
Prepare for the Exit:
Define your ideal buyer and tailor your strategy to meet their expectations.
Final Thoughts: Build with Purpose
Selling a business is about more than financial gain; it’s about leaving a legacy. The firms that attract buyers don’t get there by accident—they plan and execute with precision. If your goal is to sell one day, the work starts now.
From my own journey, I can tell you that making your firm sellable requires discipline, foresight, and a willingness to think like an acquirer. But when you get it right, the reward isn’t just a sale—it’s the culmination of everything you’ve built. Start today, and you’ll thank yourself tomorrow.
