Photo by Stephen Ventura on Unsplash
We always say that, on average, businesses take 6-12 months to sell. Today we’re going to discuss a transaction that took three years from initial contact to closing, and how and why it ended up being a success all around, despite many challenges.
Listing
Sellers come to us in many different ways. This particular seller had a liquor store and heard us out about the possibility of a sale back in early 2022. But she rejected our valuation and went back to running her business.
A year later, we heard from her. She sent us her 2022 P&L, asking us what we thought. We offered some suggestions on what she could improve to drive value. She heard us out, but wasn’t ready to go to market yet. In fact, it wasn’t until mid-2025 that she signed an engagement with us. But about six weeks after she did that, we received an Offer to Purchase and started to move towards a 60-day close, around August 25, 2025.
Inexperience
The challenge we as advisors faced was a highly inexperienced buyer who himself did not engage with any advisors to represent or assist him, but this is typical. Our seller was also inexperienced, and she allocated a major portion of the sale price to goodwill. This is usually done to maximize favorable tax treatment, which is great for the seller. But a buyer still has to get a bank to back him, and the banks he was going to were basic commercial lenders who were asking to push the sale price down and demanding concessions.
What we did as advisors helped both parties. We told the seller to stand firm on price and not accept the narrative being given by the lenders that the buyer was going to. We then went to the buyer and introduced him to some of the banks that we had relationships with, banks that specialized in SBA loans, and we managed to get funding and move towards a closing.
Another challenge we faced with the buyer was poor communication. This led to lack of progress on all the moving parts of the deal and after a serious conversation, a one-time one-month extension was granted and a new closing date of September 30th was set. We got the buyer to commit to better communication, with the consequence of losing out on the deal if that communication did not materialize.
Not to be outdone in inexperience, our seller chose an inexperienced attorney, who mistook the Offer to Purchase as a final document to mark up, instead of a rough draft from which you create a final Purchase Agreement.
Again, we took the initiative to keep the deal moving forward by making clear the differences between an Offer to Purchase and a Purchase Agreement to the attorney, while telling the seller to keep a detailed file of all legal counsel provided by the attorney, to mitigate against future potential liabilities around the transaction.
There were a lot of other interesting twists and turns in this story, but the important thing to know is that it did close at the end of September 2025.
Lessons
As we often do, let’s look at three key lessons from this story:
- Selling isn’t always an overnight decision. Sometimes you wake up one day and decide you want to get out. But as we saw in this case, a combination of increased sales and a seller who was ready to move on from the business led to the business being listed years after the first contact.
- Tax strategy affects buyers and sellers. We always say that it’s important to have good relationships with bankers, and that’s important for buyers and sellers. And in our profession, we particularly value relationships with SBA-focused banks. Keep in mind that the amount of the business value attributable to goodwill is usually a deal point to be negotiated, but if you overallocate goodwill, you may limit the options of a buyer.
- Delay kills deals. In this case, we had a successful intervention with the buyer, warning him he could easily lose the deal if he didn’t make significant changes in how quickly he communicated and took care of paperwork on his side. Thankfully, he took our advice onboard and we got to a happy ending to the story.
Are you, like the seller in the story, thinking about selling your business, but not right now? That means it’s a perfect time for us to chat without any pressure or deadlines. Contact us today.