7 Rules for Keeping a Deal On Track

Keeping a Deal On TrackThere are ways that business deals can get off track that occur due to chance or something unexpected. But very often deals blow up because either the buyer or the seller fails to follow an unwritten rule. We’ve put together a short list of those rules to help you keep your transaction where it belongs: on track to a closing.

1. No Surprises

Surprises are fun in real life. Not when you’re going through a business transaction. Disclose everything you think you should and when in doubt, ask your broker. When you uncover a “surprise” in getting the paperwork ready, disclose it as soon as possible so that everyone can make a decision to carry forward (or not) with that knowledge in mind.

2. Silence Isn’t Golden

A transaction is a process built on momentum and part of that momentum is having an open line of communication. This doesn’t mean that you’ll be able to get an item requested for due diligence right away, but it does mean suddenly going radio silent for a week or two in the middle of the deal is unacceptable.

3. Speed Matters

Yes, there’s a mountain of paperwork required for due diligence and for the banks. Yes, getting these bits of paperwork put together faster rather than slower makes a big difference, not just for your own stress, but for the confidence of the other party.

4. Emotions Don’t Help

While you might be very attached to your business — understandably so, as it often represents years of blood, sweat, and tears — you need to set any emotion you have about the business to the side when having conversations about it. 

Don’t take requests or questions personally. This is part of a process that many have gone through before you and many will go through after you. Stay professional.

5. Beware of Texts and Emails

There’s an old rule that says if you think something would be better said by voice or in person, do so. Email and text will always lack the nuance of voice tone or the reality of body language. Mitigate this by refusing to deal with critical, possibly emotional (see Rule #4) issues by email and text, opting either for voice memos, phone calls, or even a Loom video.

6. Face-to-Face Meetings Win

While it’s not always possible to meet face-to-face, the normalization of video meetings because of the pandemic has given us an extra tool to keep both parties talking and seeing that everyone is on the same page. 

When possible, do meet in person as this will help establish rapport that can help you get through tougher parts of the transaction or when you want to hammer out deal points.

7. No Such Thing as a Stupid Question

We all know the hackneyed line about why we don’t “assume” things. Lean into that in a business transaction. If you have a question, ask it. If you have several, ask those. The more clarity there is about every aspect of the transaction, the easier and smoother it will be when it’s time to finally cross that finish line.

We’ve saved a few rules for our clients. Interested in becoming one? Give us a call.

2022 Trends in Business Transactions Continuing into 2023

2022 Trends in Business Transactions Continuing into 2023Interest rates, buyer confidence, inflation…these are statistics that don’t care about a new year. They will continue whichever way they want whether a ball drops in New York at midnight or not.. But humans do see a lot of significance in a new year, and that invisible line between December 31st and January 1st can be an accelerant for a seller to get a deal closed or a final push for a buyer to finally get serious about buying a business in a new year.

Interest Rates

Interest rates are on a trend line up, which means that the cost of operating a business is going up. So, unless sales are up and margins are staying the same, profitability will be down which means valuations will be down…unless proper steps are taken.

Remedies: work with your bank on strategies to deal with interest rates, whether it be on your line of credit or even a loan you might have.

Buyer Confidence

Before the rain comes you can often smell it or sense it. Market forecasters don’t entirely agree about what is going to happen or when it’s going to happen. That uncertainty translates into “feels like rain” so that is leading to a dip in buyer confidence.

Remedies: Sellers need to continue to stress their fundamentals and brag about their performance in 2020 or 2021, if there’s braggable material there. Unless buyers think whatever is coming next will be worse than extreme Covid lockdowns, they may be able to see through their feelings to the hard, cold numbers.


Prices are going up in almost every sector. That means if you haven’t raised prices, you are likely making less money, because your costs have gone up. Some businesses have held the line on pricing in part not to shock customers, in part not to lose market share. But two years on with inflation continuing on, those businesses are seriously considering a price change.

Remedies: raise prices. Raising your prices periodically is a healthy business practice anyway, but even more so when inflation is not a secret. You can also find creative ways to offer customers more perceived value, whether that might be offering a discount on a larger advance purchase than they are used to or asking them to renew a contract for a longer period before you raise prices. Remember that keeping a solid profit margin isn’t just about your business surviving and thriving in the short-term, it’s about a narrative of value in the medium and long-term, particularly if you want to sell.

Seller Fatigue

When we look back at this period in years to come, we might lead the narrative in this way, “And then this happened, and then this happened, and then this happened.” We saw in the last two years that some business owners were already contemplating a sale, but Covid made them tap out sooner. As the issues we mentioned above continue on, many are looking at 2023 with the thought that they don’t want to be in this same position this time next year.

Remedies: explore selling. It’s okay to admit that you’re tired and want to give up. Nobody is supposed to run a business forever. That doesn’t mean we’re going to be able to list and sell your business before the new year (though stranger things have happened) but you should talk to us now so that we have a plan for the new year. When everyone comes back from the holidays you will be ready to go with your listing and be energized that an exit plan is in place.

Pondering other trends we didn’t mention here? We’d love to talk to you about them. Give us a call.

Understanding Buyer Types

Understanding Buyer TypesWhen business owners put up their companies for sale, there’s not really any way to guess what type of buyer may end up acquiring it. But to be better prepared to negotiate and communicate during the sale process, sellers should be familiar with four typical buyer types, who vary in goals, spending power, and needs.

Individual Buyers

Individual buyers are often people looking to be owner/operators. They may be seasoned business owners, but may also be long-time employees who’ve finally decided to take the plunge into entrepreneurship. They represent the type of buyer we most often see here at Apex.

Individual buyers will often:

Sellers should find out: 

  • what is the motivation of this type of buyer?
  • what are their financial means?
  • do these buyers have the support of friends and family?

Strategic Buyers

Strategic buyers are usually companies (not individuals) looking to expand their operations by acquiring an existing business.

Strategic buyers are:

  • not at their first rodeo — if they are in acquisition mode it’s because they already know how to run a well-oiled company
  • worthy negotiators — because this isn’t their first rodeo, you’ll need strategies for how to encounter deal points
  • likely to be in your industry or near it — sometimes they can be a vendor or customer

Sellers should find out: where does this acquisition fit in with the greater plan?

Additional things to consider:

  • Your brand may disappear
  • Your employees may be let go
  • Financing will usually not be a problem
  • Some form of Seller financing or earnout is still likely

Financial Buyers

Like strategic buyers, financial buyers are also companies, but they are less interested in expanding into local markets and more interested in digging into your numbers to look at your ROI.

Financial buyers are often:

  • Private equity groups
  • Hedge funds
  • High net worth individuals
  • Not excited about risk

Sellers should find out: what sort of returns are these buyers looking for in the short, medium, and long term?

Sellers should also expect forensic due diligence from this type of buyer. Like strategic buyers, they may look to “trim fat” by making changes to your business right away. 

Family Offices

Family offices could be either strategic or financial buyers, depending on what their philosophy is. But all family offices are generally on the lookout for highly profitable ventures offering attractive long-term returns.


It doesn’t happen often, but we have helped employees buy companies. They offer a unique opportunity.


  • Know the business better than any outsider could
  • Are incentivized to grow the business 
  • Are preserving continuity for themselves while taking on a risk they feel comfortable with

Employees are likely to have a profile that overlaps with individual buyers. If financially qualified, banks love this type of buyer.

Sellers should find out: would an ESOP help develop this type of option or be a hindrance in a sale to the other types of buyers?

Final Thoughts

By being familiar with the types of buyers, you can have discussions with your broker about what is likely to be the best type of buyer for your business and then market your business accordingly. While it’s important to have a wide buyer pool, being prepared for specific types of buyers will pay dividends during the go to market phase.

Not sure which type of buyer is best for your business? Give us a call and we’ll share our expertise.

5 Items that Belong On Your Business Sale Closing Checklist

5 Items that Belong On Your Business Sale Closing ChecklistEvery business is going to have its own particular set of documents that it’s going to need at closing. But there are a few that need to be on everyone’s checklist and a couple that often get forgotten or don’t get due consideration. In this article we’ll share those items and what you should know about them.

But before we get to them, you have to realize that a closing date is an expression of intent. It’s not a guarantee. There are things that both buyer and seller can do to move that date around. Whether you’re a buyer or a seller, you don’t want your actions to be the reason a transaction is held up. Make sure these items are handled so that closing can happen as scheduled.

Work in Progress (WIP)

The reality is that sellers are going to be delivering goods and services to your customers right up until and beyond the moment of the transaction. Both buyers and sellers will want there to be as little interruption as possible to normal business operations. This means creating a document of work in progress and figuring out how that WIP is incorporated into the sale price.

For example, if you have taken in work that the seller has already received payment for, but the employees or contractors will not complete (or get paid for) until after the sale, you have to work out who is going to pay. Will the seller make separate payments to those employees and contractors for that WIP, or will it be deducted from the sale price, leaving the new owner to take care of it? That’s one way of looking at it, and there’s no “correct” answer, but it’s not something you want to leave to the last moment.

Building Lease

We can’t tell you how often business transactions have been held up (or blown up) because of failure to deal with a lease issue. If you have a lease, you need to make sure long before closing that a new lease can be contracted with the buyer or that the seller can pass on the lease. 

This is an example of an item that is out of both the buyer and the seller’s control, so the more time that is allowed to deal with this, the better.

New Entity

The buyer is often going to need to create a new business entity and once he/she has that EIN, will need it to open business bank accounts and credit card merchant accounts. That shiny new bank account will also be a good place for the buyer to drop in some working capital.

We’ve also mentioned the need for buyers to make sure they have the proper licensing with the appropriate authorities in order to have a seamless transition. Often a new entity will be needed to obtain those licenses.

Employee Meeting

You need to keep lips zipped when it comes to a business transaction (if you don’t believe us we shared some recent stories on our podcast). Ideally most (if not all) of your employees should find out about the transaction on the day it closes.

How the meeting goes and what is covered is something for buyer and seller to work out, but the three feelings your employees should have coming out of the meeting are:

  • Security: they aren’t getting fired.
  • Positivity: this is a good thing.
  • Optimistic: there are some exciting possibilities ahead.

Find ways to give your employees these feelings at the meeting, and you’ll have succeeded.

Closing Meeting

This might seem like the most obvious item, but there’s a logic to when this meeting occurs as well. Things to consider:

  • Make the closing for the morning so that the parties can go to banks or government offices afterwards.
  • Scheduling the closing at the end of a quarter, month, or pay period to simplify calculations. Bottom line – close when all parties are able to do so. Any day will work. 

We’re here to make your closings simple. Give us a call to see how we can help you with your next business transaction.

Build Your Business Sale Dream Team Now

Business Sale Dream TeamNo matter how many years you’ve been in business, you only sell that business once. That’s why a sale deserves at least some of the care and planning you put into building that business all these years. And yet, we still (more often than we’d like) get the call with the equivalent of, “I’d like to list my business on Friday and sell it on Monday…maybe Tuesday at the latest.” 

If we could go back at least six months (ideally twelve months or more) with that caller, we’d talk to them about putting together their Dream Team for this sale. 


Business brokers think of ourselves as team captains. This isn’t our first rodeo and we know how to bring the best out of all these players who may never have met each other before. We’ve got a playbook that works and when we don’t personally know the answer to a problem or challenge we have resources to the tune of hundreds of years of experience (and hundreds and hundreds of transactions) in our office.

Financial Advisor

Particularly for those business owners who are looking to retire after this business sale, numbers really matter. Questions like “how much do I need?” and “what is the business worth?” have to be asked and answered.

A solid financial advisor will not allow you to come up with an impossibly high “what do I need” number which includes every possible contingency for life. He/she will also not take your word for what the business is worth. These advisors will get a valuation for the business and/or ask you to explain your reasoning for the business value. Having what the business is worth line up with what you need on retirement is the most important math equation to solve before the sale. And it’s not something you can just wish into existence. We also can’t tell you the number of times we’ve heard, “Well the business has to be worth that much because that’s what I need to retire.”

Wrong answer.


As the financial advisor asks the larger questions, your company CPA can answer the question every buyer will have: are the books clean?

If they are not, they need to get clean some time before the sale. We aren’t talking about weeks or months. We are talking about years. Unreliable books for 2-3 years and one good year isn’t just a bad recipe for getting bank financing, it’s also unlikely to hook interested buyers.

While the best CPAs will have warned you for years against too many addbacks, ones fit for your dream team will get your books clean as soon as possible and put systems in place to ensure they stay that way for the future owner.

Tax Advisor

So you’re going to have a liquidity event when you sell that is going to create tax problems to solve. You need someone experienced in these issues to help you structure a deal that makes sense for your plans (this means talking to your financial advisor, too) but also doesn’t give more to the government than you are legally or morally obligated to.

A dream team tax advisor will have helped more than one business owner structure a deal before, perhaps even helping to create a deferred sales trust when that made sense.

Deal Attorney

While you may have been working with a number of great attorneys over the years, when it comes to your transaction, you should look at experience over a relationship. This transaction isn’t about friendship, it’s about business, so find someone with experience to help you get the most out of it.

We’ve said before that inexperienced attorneys can exceed their remit in business transactions so if you’re short on recommendations in your network, we’ve got a number that have consistently shown themselves as dream team players in transactions with us.

Looking to build your dream team? Don’t wait until you’re ready to sell. Start building it when you’ve built something saleable and know that you’d like to sell it one day. The best prepared get the best results.

And remember, you’re only going to sell this business once. So make it count.

Continuity vs. Change in Business Sales

Continuity vs. Change in Business SalesIn our social-media conscious age, we might think it’s a perfectly normal thing to announce a new business acquisition to the world. Imagine the humble-braggy LinkedIn post, “I’m honored to announce…” along with press releases and maybe even a shiny new “under new management” sign to drape across the exterior of the business. The problem? These aren’t always the smartest moves. Balancing continuity with change is one of the biggest challenges that any new business owner will face.

Sometimes Change is Good

We shared a success story some time ago of an owner that made pretty dramatic changes right off the bat which led to major financial gains. Short version: the old owner didn’t always send complete orders, but customers put up with it because they liked the owner and there weren’t a lot of alternatives. 

All the new owner did was actually start fulfilling the orders as requested. No more partial fulfillment. Customers were delighted and unsurprisingly, new business followed. 

Other Times, It’s Not

As we recently shared in a podcast episode, one new owner made a change and was bankrupt before the year was out. As in the previous example, the old owner could have improved a part of the business before the sale. In this case, his products and services were underpriced for the market.

The new owner, dreaming of dollar signs, immediately implemented a dramatic price change when he took over the business. The customers were unhappy and it was only 60 days later that the new owner had driven the old business into the ground.

Were the prices outdated? Definitely. They hadn’t been changed in over a decade.

Could they have been changed gradually, with explanations and context? Of course.

Did the customers save any money by switching? Probably not, but they got to vote with their feet, which is one of the most powerful muscles that consumers like to flex.

But the new owner thought revenue was just a matter of flipping a switch. Unfortunately for him, it was the off switch.

We Resist Change

We may not like to admit it, but we are creatures of habit. That’s why you see companies spend untold millions getting you to simply try a new beverage or toothpaste or even a type of “burger” made with beets. They know that at least trying something is a gateway to possibly making that product a willful future purchase.

The same is true with businesses we deal with. We develop relationships with them and just like employees, we fear that the new owners might mess everything up. We might stay away from the business for a while “waiting to see what happens” but that in itself can create a self-fulfilling prophecy in which fewer people go and the business hits a revenue death spiral, simply because of the perception of change.

Change, But Slowly

This is not an impossible problem. In fact, we’ve seen it successfully negotiated hundreds of times.

Firstly, don’t change anything. The reason you bought a business in the first place is because it works. If it ain’t broke, don’t fix it.

Obviously changes that are not customer-facing can be done right away, whether that’s a change of who the company banks with, or processes credit cards with, or solicits for insurance coverage.

But other things, like what we mentioned regarding pricing, or personnel who are customer-facing and have developed relationships with the customer base, should be left as is.

If there are changes you’re considering, poll employees and customers. Give them a voice.

If there are changes you are definitely implementing, think about how to give context and explanations to customers. They deserve it. They don’t owe you anything, especially as a new owner. Take the time to explain why prices need to change, or the logo is adding a new color, or why you’re adding a new product or service (or getting rid of old ones). People won’t always be happy with the changes, but they’ll appreciate the explanation.

And you’re much more likely to keep them as customers. And keep the business too, instead of losing it in 60 days.

Want more tips on how not to lose a business in 60 days? Give us a call!

Do’s and Don’ts of a First Buyer/Seller Meeting

Dos and Donts of a First Buyer/Seller MeetingAll transactions start with a first buyer/seller meeting. There are lots of ways to get this meeting right, and a few ways to get it really wrong. In this article we’ll share some do’s and don’ts you need to have on hand for a successful buyer/seller meeting.


Meet in Person

While the pandemic normalized video meetings for buyers and sellers not geographically convenient to each other, meeting in person is always the best case scenario. You get all the advantages of real-life meetings, including enhanced body language reads.

But if you can’t meet in person, definitely opt for a video meeting. It’s a new normal that we’ve seen enhance the business transaction process significantly.

Build a Relationship

If the end goal is a transaction, realize that this is where everything starts, so take it seriously.

Be yourself and truly get to know the other person via the frame of their business. Before they decided to put the business on the market, what were some of the high points they experienced in growing the business? Ask about the lows too.

Some Basic Diligence

The worst thing we as brokers can experience is an unprepared buyer. They don’t just make themselves look bad, they make us look bad as well, as the seller might understandably assume we didn’t prepare our client for the meeting. 

This is not the meeting to be asking questions about add backs or negotiating on price point (it is a first meeting, after all…slow down!). Just as an employer doesn’t like it when a candidate for a job has zero questions during an interview, a seller might understandably be skeptical if a buyer doesn’t come with at least one or two questions to this meeting.


Get Overly Detailed

This is not life-story time. It’s enough to find out what a day in the life is for the seller as well as what mistakes they feel they’ve made and what opportunities they have not yet taken on but could be attractive to a seller. 

On the other hand, don’t let sellers get away with short, closed answers. They should be willing to give context, not just answer “Yes,” or “No.”

Think You’re Special

American consumer culture teaches us that “the customer is always right.” The healthiness of that attitude is a topic for another day, but we can certainly say it does not apply in business transactions. The seller is interviewing the buyer just as much as the buyer may be interviewing the seller. Stay humble and try not to lead by bragging.

This isn’t a job interview or a home purchase (it’s actually a little bit of both) so don’t fall into old habits of meetings but think about this as a different sort of meeting than you might be used to.

Final Thoughts

Buyers should remember that this is a 60-90 minute meeting, tops. It’s a high-level meeting to establish a relationship and ask some key questions.

That begs the question…can you make an offer at this meeting?

Absolutely. We see people ask for an Offer to Purchase form and sometimes end the meeting by signing one and giving it to the seller.

However, that’s not the expectation for most transactions. As we noted above, this is a first meeting and it’s understandable that both parties may want to take some time to reflect before progressing further. 

Want to make sure your first buyer/seller meeting goes well? Ask one of our team to prepare you! Give us a call today.

Key Elements of an Offer

Key Elements of an OfferWe’ve talked about our signature Offer to Purchase (OTP) before. In this article we’re going to break down that OTP into some broad areas to make sure buyers know what can make an offer attractive to sellers.

Don’t Wait on Diligence

Sometimes buyers will ask to do due diligence before making an offer. But a business is like anything for sale, and those who submit offers sooner are more likely to get accepted than the offer that may come from someone “after they’ve seen additional details.”

Show Me the Money

Earnest money or escrow is typically required of a buyer when making an offer. A seller wants to know that a buyer is serious and committed before allowing additional confidential information to be shared. Often the escrow money that accompanies an offer is the first of three payments that together can comprise a down payment:

  • Escrow payment 1 accompanies an offer
  • Escrow payment 2 is due with the acceptance of an offer
  • Escrow payment 3 is delivered a week prior to closing

These three payments will usually comprise at least 10% of the total amount of the sale, but can sometimes be more.

The amount of the earnest money can also signal to a seller how serious an offer is. This doesn’t by itself make the offer better, but it’s definitely something that sellers consider when looking at competing offers.

Time Constraints 

The offer should also mention milestones. Examples include:

  • A certain amount of time for diligence. 3 weeks is the most common.
  • A target closing date. This will depend on the particularities of the buyer and seller and can be tied to personal or business matters. The bank lending process is also a key factor in setting a closing date.
  • Transition. Sometimes sellers are getting out lock, stock, and barrel, and will have a short transition time. Other times sellers will continue to work in the business uninterrupted for months, sometimes even years at a time. A desired transition time should be spelled out in the offer.

Obviously all these times are negotiable, as they are part of an offer, and when the seller accepts, he/she may accept with changes made to these timelines.

Reminder to Sellers

While it’s exciting to accept an offer, it’s important to remember that it’s only the beginning of the process. We often tell sellers to keep working in their business as if the sale was not going to happen. 

That means: 

  • keeping the sale confidential
  • continuing to run the business as usual, whether that’s hiring new team members or running the usual advertising campaigns, etc.
  • setting aside a block of time to dedicate to the sale each week so that the process keeps moving forward; selling a business is a part-time job on top of running your business — thankfully it’s just a temporary one

We help draft offer letters just about every week of the year as part of the service we offer to our clients. Learn more about how we can help you by giving us a call.

First Steps in Listing Your Business

First Steps in Listing Your BusinessWe’ve talked in the past about broad reasons why we might (and might not) take your listing, so today we’re going to get a bit more granular and talk about what that process of listing looks like.

I Want to Sell!

We get it! You’re ready to move on with your life and once you’ve told us you want to sell, you might already have a mental countdown clock started. But you shouldn’t start that clock, because we haven’t listed the business yet, and when we do, it’s going to take an average of 6-9 months to sell. So, we appreciate the enthusiasm but we need a few things first!

Key Information

We can’t price and promote your business without hard data. Most times that hard data is going to come from the last three years of tax returns along with the financial statements to substantiate and corroborate those returns. 

We’re going to need a bit of time with you and your accountant to understand some charges, as we haven’t worked side-by-side with you in the business for years and may not understand why certain things are classified the way they are.

Not Auditors

We aren’t the IRS and we aren’t interested in passing judgment or scolding you for where expenses have been classified. What matters to us is getting to a clear number of SDE that will allow us to move towards a proper price for your business. That said, we’ve seen some, shall we say, creative interpretations, including:

  • Vet visits for a dog classified as “security” expenses
  • Cosmetic surgery for a spouse classified as “building improvements”
  • A lake house used once in five years for a company retreat as an active company asset

Banks can be leery of excessive addbacks, but that doesn’t mean they won’t work with companies that have a lot of them. But without being clear as to what expenses are legitimate addbacks, we can’t get a true value for your business.

Seller Disclosure Statement

So we’ve gotten all the key paperwork we need to get pricing, now we need to cover anything the numbers can’t tell us, which can include:

  • Current or future lawsuits/legal actions against the business
  • lease/real estate situation (if applicable)
  • Upcoming changes (key employee or major customer leaving)

This information completes the snapshot we will come up with called the Confidential Business Review (CBR).

Why Confidentiality Matters

Confidentiality is perhaps an important part of a business sale in general, but it’s particularly important during the listing process. Don’t tell employees what is in the works or you may have an exodus that leaves you with a shell of a business.

Going to Market

Armed with all this information, we will put together marketing material to showcase your business in various formats and on various platforms, and to do so confidentially. We asked you to keep things confidential, and we follow our own advice. We even keep that confidentiality sometimes long after a sale closes, referring in general terms to a business in a generic industry in a generic region.

That countdown clock we referred to above? Now that the business is listed, you’re free to start it, but make sure you do with expectations that have been tempered by a discussion with us, not a timeframe you’ve manufactured in your head. You may have sold a business before, but you’ve never sold this business, in this market, before. 

Did this article make you realize you need to get a few ducks in a row before you can even list your business? We’d love to help you with those ducks! Give us a call.

Passing On a MBE or WBE Certification in a Sale

Passing On a MBE or WBE Certification in a SaleA minority-owned business enterprise (MBE) or woman-owned business enterprise (WBE) is a powerful certification to have in certain industries. They can connect you with larger corporations and government agencies (at the federal, state, and local level) that set spending goals and targets for businesses owned by minorities and/or women. But what happens when it’s time for those businesses to sell?


Before we talk about exits, let’s review what it might take to get one of these certifications in the first place.


These are for-profit businesses, regardless of size, physically located in the US or one of its territories, that are owned, operated, and controlled by minority group members. Those members are US citizens who are:

  • African-American
  • Hispanic-American (includes Puerto Rico, Mexico, Cuba, Central and South America)
  • Native American (includes those who are Eskimo, Aleut, native Hawaiian)
  • Asian-Pacific American (includes Japan, China, the Philippines, Vietnam, Korea, Laos, Cambodia, Taiwan, the Indian subcontinent, Samoa, Guam, and other US trust territories of the Pacific)

Ownership is defined as at least 51% owned by such individuals. In the case of a publicly-traded company, that means 51% of the stock must be owned by one or more such individuals. 


Like MBEs, these are for-profit businesses physically located in the US or one of its territories, that are owned, operated, and controlled by women who are US citizens or Legal Resident Aliens. The same ownership, operation, and control rules are in place.

Other Certifications

There are a couple more business designations worth knowing:

  • DBE (Disadvantaged Business Enterprise): aimed at those that have disabilities or residents of economically depressed areas
  • VOSB (Veteran-Owned Small Business): at least 51% owned by one or more veterans

Exit Strategies

There are two clear strategies for exiting a business with one or more of these certifications.


If the majority of the business of the firm comes through contracts that are tied to these certifications, you will probably want to find buyers that can retain this certification. That means if you have a WBE, you’re going to have to sell to women only, or find a buying group that will make sure that magical 51% threshold is occupied by women.  Same for an MBE.


You’ve heard us talk before about the importance of having as wide of a buyer pool as possible. More buyers means more interest means more offers means more leverage. But this path is only worth pursuing if you’re willing to take a valuation haircut. 

You can prepare two financial projections leading to two different sale prices, a higher one that a buyer that can qualify for one of the certifications would pay (because he/she would hold on to the business/contracts that are tied to that certification), and a lower one that assumes the certification will be lost and the business will have to continue on without it.

We would go for “continuity” if more than 20% of the business is tied to a certification and for “break” if 20% or less of the business is tied to a certification. The “break” option is nice in that it still offers continuity should such a buyer show up.

Do you have a MBE or WBE or other certification and have been procrastinating on an exit because you don’t know what to do? We can help (because we’ve helped in these cases in the past). Give us a call.