Business Brokering Buy Sell Business – Worldwide Business Brokers

Selling a Business: Do You Know What’s Next

Selling a Business: Do You know What’s Next?

27 June 2022: Selling a Business: Do You Know What’s Next?

When we get a call from a business owner who tells us that they’re ready to sell their business, one of the first questions we ask is, “what’s next?” As a rule, the response is usually something along the lines of, “Why is that important?”

Well, it’s important for several reasons, both for the seller and for the business broker/M&A advisor.

I know from personal experience why it’s important for the seller – and from anecdotal evidence why it’s important for the broker.

The Seller

From the seller’s standpoint, several issues must be considered.

First, is the “what’s next” question. What does the seller plan to do post-closing? The answer to this question is important on multiple levels.

One is a consideration that the seller has, in all likelihood, been running his or her business for many years. They’ve gotten up at 6 AM, were in the shop or office by 7.00, guided five or 25 or 50 employees, took and made countless phone calls from and to vendors, customers and clients, analyzed sales data and basically acted as the general of a small army, monitoring battlefield (market) conditions, directing the positioning of materiél (assets), addressing logistical problems, developing competitive strategies and probably making their own coffee. Basically the role of someone with a lot of responsibility for a lot of people, upstream, downstream and in-house.


We offer a comprehensive coaching program  – both group coaching in our Brokers’ Roundtable community as well as one-on-one coaching – tailored to Realtors, business owners , buyers and anyone interested in valuing, buying or selling a business.

If you’d like to learn more, email me at jo*@Wo*******************.com


What happens when a person like that all of a sudden has nothing to do; no reason to get up in the morning?

I can tell you what happens because it happened to me. That person is lost.

It doesn’t matter how big the bank account now is, productive people have to have something to do.

That “something” could be nothing more meaningful or strenuous than a couple of rounds of golf, learning how to fly-fish or how to speak a new language. But there HAS to be something.

When I sold my business nearly 25 years ago, I was totally unprepared. I was miserable and moped around for about a month before buying an open-ended ticket to Paris and spending a good portion of the next four years breaking speed limits in a dozen countries.

But most people don’t have that luxury. Spouses, kids, school – a host of responsibilities – will often eliminate the “escapist’s” route. But there has to be something or the seller – now an ex-business owner – can go nuts.

And if needing something to occupy oneself weren’t enough, add to that the emotional impact of suddenly finding yourself stripped of your self image. The seller, who was once known in the community as the owner of ABC Widgets, sponsor of Little League teams and soccer tournaments, has lost a major aspect of their personal identity. When I sold, this particularly impacted me – in surprisingly unanticipated and uncomfortable ways.

So, there’s got to be something that the seller plans to do. There MUST be a plan. But that brings up the second major consideration for a seller: will there be enough dough?

A Sailboat or a Hammock?

Whatever the seller plans to do post-closing, it’s going to cost money. The only question is, “how much?”

Will the net proceeds of the sale generate enough to fund the seller’s next pursuit?

Sailing around the world or competing on the F1 circuit requires a completely different financial statement then puttering around on the golf course or growing organic arugula out behind the porch. And what about the proverbial “serial entrepreneur”, a seller with plans for another startup? Will the capital be there?

These are, of course, questions we can’t answer. But they must be asked because, if the seller has no answers, he or she is likely headed for a period of discomfort and uncertainty – at best – and a last minute decision to walk away from the deal, at worst.


REALTORS! Our course,Learn How to Value and SUCCESSFULLY Sell Businesses, teaches you how to accurately value and successfully sell businesses.

Don’t Miss Out on the Coming “Silver Tsunami”!

Of course, walking away from the deal could be pretty costly as neither the buyer nor the broker will take too kindly to it.

But walking away from the deal at the last minute happens sometimes – either because the seller doesn’t have a plan for life post-closing or, if the seller does, the proceeds of the sale are inadequate to fund that plan.

A couple of days before the deal is scheduled to close, the closing attorney prepares and distributes what in real estate circles is referred to as a settlement statement, the document that, based on the transaction agreement between the parties and the listing agreement between the seller and the broker, shows how all the acquisition money is to be distributed.

A $3 million deal can quickly shrink to $2.5 million after legal and brokerage fees, local transfer fees, appraisal fees, etc., etc. And this is before the tax man claims his share.

The seller may, at the last minute, realize that he or she won’t have enough capital to enable them to buy that 12 metre yacht or start that software business – or even simply enjoy the same standard of living that they had while running their business.

As this realization dawns, there’s guaranteed to be some angry words, probably directed at the broker (if the broker didn’t have this discussion during meeting #2), the lawyers (for their unconscionable fees), the buyer (for trying to “steal” the business), the tax man (well, for pretty much everything) and possibly the cat (for making such a racket stomping around the house). In a worst case situation, the seller can simply bail on the deal.

The Business Broker

If the seller bails at the 11th hour, it’s pretty easy to see the impact on the broker. Six, eight, 10 months – or more! – of work slides right down the drain with nary a sou in compensation. But even if the seller reluctantly stays in the deal, it could also mean a forced renegotiation of the broker’s fee. 

The fee structures that we recommend in our course and have used in our network for 20 years would yield, on a $3 million deal, a commission of about $240,000. When the seller sees that on the settlement statement, it looks like a big number to them – and one that might be made smaller with a little pressure.

I’ve written previously about ethically-challenged sellers (here and here). As a business broker, you’re bound to run into one sooner or later. Your fee is usually the fattest one in the deal (because you’ve done FAR more work than anyone else) and there will be sellers that have never voiced any concern about that fee – until that 11th hour. Such sellers know that you’re likely to agree to a smaller fee rather than see the deal go down the drain. (In a couple of our courses, we describe ways to avoid falling into this trap.)

The Bottom Line

All of this – this entire discussion – should make painfully obvious the need for a valuation, done up front, before any listing agreement is even considered, let alone signed. Doing one will provide the seller with a sense of what they might anticipate receiving when the dust settles.

While it’s not our job to calculate the seller’s net proceeds – and there’s no way we can, in any event – we assume that the seller is intelligent enough to consult with their tax preparer so that 1) they can see what the government is going to rip off and 2) explore strategies to keep as much of their hard-earned money as possible rather than allow the denizens of (insert your country’s capital city) blow it on moronic ideas like those listed here.

The seller has to have something to do – to look forward to – post-closing. If you’re a business owner, don’t wait until the acquisition documents are being circulated for comments and signatures. Start planning for a post-closing life at least a year before bringing your business to market.

If you’re a broker, have this conversation – ask the question – at the very early stage of your interaction with a potential seller. Doing so will accomplish three things:

  1. Illustrate your professionalism and experience.
  2. Show that you’re as concerned about your potential client as you might be about your commission.
  3. Greatly reduce the chances of having to renegotiate your commission under pressure.

If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.

I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.


Searching For…

A well-funded early education development firm seeking to acquire child care centers in the eastern United States.

If any of you know of something that might fit, please let me know.


#business #businessacquisition #sellabusiness #becomeabusinessbroker #businessbrokering #businessvaluation #MergersandAcquisitions #buyabusiness #sellabusiness #realtor #realestateagents


The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 1,000 in the world. He can be reached at jo*@Wo*******************.com

Leave a Comment

Your email address will not be published. Required fields are marked *