By: Brent Albrecht
Seeing Your Business Through a Buyer’s Eyes
Who this is for
The owner thinking about a sale in the next three to five years.
At a glance
- 75% of owners in a 2023 national survey said they want to exit within 10 years, but only 13% had a formal exit plan.1
- Small business sales reported to BizBuySell in 2025 took a median of 170 days to close, and manufacturers took the longest, at 223 days.2
- Those businesses sold for an average of 2.61× their annual cash flow, so on average each $100,000 of cash flow translated to about $261,000 in price.2
You’ve spent years building something valuable. The hard truth is that the value you see and the value a buyer will pay for are often two different numbers. The good news is that the gap is usually something you can close, if you start early enough.
This quarter’s three issues look at what it takes to build a business that is ready to sell on your timeline, not someone else’s. Too many owners start that work only when an unsolicited offer arrives or a health or family event forces the question, and by then the options are narrower. Business brokers and M&A advisors surveyed in 2025 said 90% of their recent sell-side clients were first-time sellers, and fewer than 5% had a written exit strategy before their first meeting.3 Three to five years out is the right time to start looking at your company the way a buyer will.
How a Buyer Sees Your Business
A buyer isn’t paying for your years of effort. They’re buying a stream of future earnings and pricing the risk that the stream won’t continue. Every question in due diligence (the buyer’s deep review of your books, contracts and operations) comes back to that. Will customers stay? Will key employees stay? Are the earnings you report the earnings they’ll actually get?
That risk shows up in the price. Small businesses are commonly priced as a multiple of their cash flow, and the more a buyer worries about what happens after you leave, the lower that multiple goes, or the more of the price gets pushed into payments that depend on future results. The more of those questions you can answer with documents instead of reassurances, the stronger your position at the table.
The Three Value Killers
Buyers look at many things, but three issues can do outsized damage to an offer. Here’s why each one matters and what it costs you.
Owner dependence
Why it mattersIf the key relationships, decisions and know-how all run through you, the buyer isn’t buying a business. They’re buying your job.
The resultA lower price, an earn-out (part of the price paid later, only if the business hits its targets), or a contract that keeps you in the chair long after the sale.
Customer concentration
Why it mattersWhen a few customers make up most of your revenue, losing one of them changes the whole business, and buyers know it.
The resultBuyers cut the price or tie more of it to those customers staying, so you carry the risk after closing.
Slow or messy financials
Why it mattersPersonal expenses in the books, inconsistent accounting and numbers that arrive weeks late tell a buyer the business is hard to see into.
The resultDiligence drags, trust erodes, and buyers either lower the offer or walk away.
Start Looking Now
You don’t need to be ready to sell to start thinking like a buyer. Picture yourself away for three months. Which customers, decisions and jobs would stall? Those are the places to build your team, write down how things are done and hand off relationships. Next, add up how much of last year’s revenue came from your top three customers. If it’s a large share, start widening the base or putting longer agreements in place. Then look at your books. How soon after month-end do your statements arrive, and would a stranger understand them without you in the room? Keeping personal expenses out of the business and closing the books on a regular schedule both pay off when a buyer starts asking questions.
Finally, consider a formal valuation. More owners are getting one: in a 2023 national survey, 60% of owners had a formal business valuation within the past two years, up from 18% in 2013.4 A valuation gives you a starting number and, more importantly, shows you what is holding that number back while you still have time to fix it.
Next month
What story do you want to tell a potential buyer? How to turn your company’s history, strengths and plans into a story a buyer can believe and check.
Want to Chat?
Every business is unique and faces its own challenges. State Bird Corp is here to help owners face those challenges head on. If you want to discuss the contents of this article or any aspect of your business, please reach out. We would be happy to chat!
Sources
- Exit Planning Institute, 2025 State of Owner Readiness Generational Report (analysis of the 2023 National State of Owner Readiness Survey): https://exit-planning-institute.org/hubfs/25SOOR-Generational.pdf
- BizBuySell, 2025 Year in Review: BizBuySell Market Recap: https://www.bizbuysell.com/blog/2025-year-in-review/
- IBBA and M&A Source, Market Pulse Q1 2025 Survey Results: https://www.prnewswire.com/news-releases/the-ibba-and-ma-source-announce-the-results-of-the-market-pulse-q1-2025-survey-302463766.html
- Exit Planning Institute, 2023 National State of Owner Readiness Report: https://exit-planning-institute.org/hubfs/Member%20Center%20Resources/2023%20National%20State%20of%20Owner%20Readiness%20Report.pdf
These newsletters do not constitute legal, tax, or financial advice. Every business is different. The strategies and topics described are general in nature, and readers should consult qualified advisors before taking any action.