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How to Sell a Business to Private Equity for Top Dollar

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Hey there entrepreneurs,

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Welcome to the Better Business Brief, where I share takeaways from:

• running a business I’m building to sell for millions
• my consulting with business owners building to sell for millions
• tips and tricks you can use to do the same

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Most business owners have no idea that packaging their business the right way could increase their sale price by hundreds of thousands - or even millions - of dollars.

Private equity firms don’t just throw money at any business. They look for specific financial structures, operational efficiencies, and growth strategies before they buy. If your business isn’t presented correctly, you could either get lowballed or lose the deal completely. Take it from me - the team I work with has closed over $200M in private equity transactions across many industry types…

So today, in less than 5 minutes, I’ll give you: ​ 📈 3 Ways to Increase Sale Price (Besides Profit) 🧠 How it Makes your Business an Irresistible Investment ⚠️ The #1 Mistake that will Cost you Millions

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It all starts with putting yourself into the headspace of being an investor. Think about what kind of business YOU would be excited about owning if money was the main concern…

Step 1: Financial Readiness

Before you even think about selling your business, get your financials in order. That means:

• At least three years of financials ready to go (P&L + balance sheet)
• Monthly profit and loss statements for at least the last 2 years (most owners don’t do this, but buyers expect it)
• Revenue breakdown by service or product type (for example, if you were an HVAC company: commercial vs. residential; installs vs. repairs, etc.)
• Switching from cash-based accounting to accrual accounting
• Optimizing EBITDA into Seller’s Discretionary Earnings with add-backs (most business owners minimize profits for tax purposes, but that hurts your valuation)
• Getting a third-party valuation from an actual M&A expert, not just your accountant

If your financials don’t tell a clear growth story, you are leaving money on the table.

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Step 2: Making Operations Airtight

A business without systems is just a high-paying job, not an investment. When we look at doing a private equity deal, we look for:

• Documented SOPs for sales, marketing, HR, and customer service
• Key employees locked in with contracts, incentives, and performance pay
• A CEO in place (if you are the business, we will devalue it because we will have to hire a CEO, which will make the business less profitable in the short term)
• No single customer making up more than 15 percent of revenue (if a big client leaves under new ownership, it makes the business way less profitable - this is risky)

The less dependent your business is on you, the more valuable it is. Start delegating now.
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Step 3: Framing and Deal Structuring

This is where most owners drop the ball. You need to control the narrative of your sale by:

• Setting up a data room with all financials, contracts, and legal documents in one place
• Preparing a Confidential Information Memorandum (CIM) to position your business as an opportunity for multiple different types of buyers
• Understanding deal terms like seller financing, earnouts, and equity rollovers and how they can benefit you

One of the easiest ways to increase urgency and get better offers is to talk to multiple buyers. If a buyer knows they have competition, they will move faster and pay more.

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BONUS: The Biggest Mistake That Costs Business Owners Millions

Most sellers don’t provide a clear growth plan. Private equity firms don’t just buy businesses. They buy future growth potential. In fact, we couldn’t care less about what a business’s past history was if it doesn’t indicate future profits. If you can lay out pre-negotiated acquisition targets, your business becomes way more attractive.

Here is a real-world example. If your business sells at a five times multiple, but you identify smaller businesses in your space selling at three or four times multiples, your business instantly becomes a more valuable acquisition target because there becomes a DEFINED roll-up plan where your buyer knows they could get a big return quite quickly.

I went way more in depth on this stuff in a recent video I did where I talked about how to do this preparation as a Home Services company.

BUT, most of it relates to all business types. Check it out here for deeper insights.​

If you like these ideas or found this informative, stick around and subscribe. I do this newsletter every week.

If you did, share it with a friend who may too, as this is the best way for me to grow it and make this better.

They can even sign up here :)
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Happy value-building to you!

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See you next time for Better Business Brief,

-Brody