Most owners preparing to sell a business surround themselves with advisers. That is sensible. What is less often examined is how each of those advisers is paid – because the answer shapes the advice you receive, whether anyone intends it to or not.
Follow the money around the table
A business broker typically earns a success fee: a percentage of the price, paid on completion. Corporate finance advisers work the same way. Even many "exit planners" tie their real payday to the transaction. None of this is dishonest. Success fees keep good advisers motivated and affordable. But they share one feature: the adviser earns nothing until you sell, and earns more the sooner and bigger you sell.
Now ask the uncomfortable question. If the right answer for your business is "wait two years, fix these three things, and you'll double your outcome" – who at your table is paid to say it?
The incentive nobody mentions
Four in five privately held businesses that go to market never complete a sale. The usual explanation is valuation gaps or bad luck. In my experience the more common cause is simpler: the business went to market before it was ready, because nobody in the process had an interest in delay.
The signs are familiar. Key customer contracts that were never renewed. A management team that can't run the business without the owner. Financials that won't survive diligence. Each is fixable – with time. But time is exactly what a completion-fee model is not designed to give you.
What "not yet" is worth
A client I worked with engaged a mid-size corporate finance firm to sell their business about a year before it was ready. We had spent the previous two years on the groundwork, but rather than advise them to finish that work, the firm took them through its ready-for-sale process. Nine months later, the feedback from the firm's database of buyers came back: no active interest until certain matters had been addressed.
The client re-engaged with me. Together we recognised that their original objectives for the exit had changed, and we went on to facilitate a successful exit through an Employee Ownership Trust – a route nobody around that first table had put in front of them.
Nine months and a failed process is what "go now" cost them. "Not yet" would have been worth considerably more.
A simple test
Before you appoint any adviser in your exit, ask them one question: "How do you get paid if I decide not to sell for another three years?" The answer will tell you more about the advice you'll receive than any credentials deck.
Fee-for-service advice exists precisely so that "not yet" is as easy to say as "go now". Sometimes the right answer is to sell immediately – readiness cuts both ways. But you want that conclusion to come from analysis, not from someone's fee structure.
If you're one to five years from exit and want an honest read on where your business stands, the Exit Readiness Scorecard is a good place to start.