Why Selling a Tampa Lower-Middle-Market Business Requires More Than a Valuation

I’ve been a business broker in Florida for 20 years.

One thing I’ve learned is that business owners often start the conversation in the wrong place.

They ask:

“What is my business worth?”

That’s an important question.

But it isn’t the first question I would ask.

I’d ask:

“What are you trying to accomplish with your exit?”

There’s a big difference.

When you get into the lower-middle market, selling a business becomes considerably more complicated.

You’re potentially dealing with:

• SBA financing
• Strategic buyers
• Private equity
• Quality of Earnings
• EBITDA and SDE
• Working capital requirements
• Customer concentration
• Contract assignability
• Management depth
• Owner dependency
• Seller financing
• Tax considerations
• Asset vs. stock transactions
• Transition agreements
• Due diligence

The buyer isn’t just asking what the company earned.

They’re asking:

“Will this business continue to produce those earnings after the owner leaves?”

That’s where owner dependency becomes so important.

The owner may be the company’s best salesperson.

The owner may know every customer.

The owner may solve every problem.

The owner may approve every important decision.

The owner may be the person everyone calls when something goes wrong.

That’s often how great businesses are built.

But it can create a problem when the owner wants to leave.

A buyer doesn’t necessarily want to buy the owner’s job.

They want to buy a business that can operate without the owner.

That’s why I believe CBI and CEPA experience matters.

A CBI — Certified Business Intermediary — brings a transaction perspective.

How do you value the company?

How do you identify and qualify buyers?

How do you structure the transaction?

How do you manage negotiations and due diligence?

How do you get from the initial conversation to closing?

A CEPA — Certified Exit Planning Advisor — brings another perspective.

What does the owner actually want?

When do they want to leave?

How much do they need?

Is the business ready?

What needs to be improved before going to market?

What happens after the closing?

Those are different questions.

And both matter.

Sometimes the answer isn’t:

“Let’s sell the business.”

Sometimes the answer is:

“Let’s spend the next two or three years getting the business ready to sell.”

Clean up the books.

Build management.

Reduce owner dependency.

Improve systems.

Diversify customers.

Strengthen contracts.

Improve profitability.

Create a business that someone else can actually step into and operate.

That’s exit planning.

A valuation is a snapshot.

An exit plan is a roadmap.

If you’re a Tampa Bay business owner thinking about selling in one year, five years or even ten years, you don’t have to put your business on the market today.

But you should understand what a buyer is going to see when you eventually do.

I’ve spent 20 years working with business owners throughout Tampa Bay and Central Florida, from Main Street businesses to lower-middle-market transactions.

Start planning your exit before you need to sell.

Because the best exit is usually not the one you start planning when you’re ready to leave.

It’s the one you’ve been preparing for all along.

— Michael Shea, P.A.