Selling Your Business: Why It's More Complex Than Selling Your Home

Selling a business is like selling a house. 

There are surface-level similarities between selling your house and business. An agent helps you list it, you see offers, there’s due diligence, and a closing. But claiming they are the same is like saying the Boston Red Sox and the New York Yankees are alike because they both play baseball. Technically true. Practically? It couldn’t be more off. Try making this ill-willed sports reference to someone outside of Fenway or while walking through the Bronx.  

Bias? Maybe a little. But, IT ExchangeNet has been selling IT and Digital Marketing firms since 1998, and we’ve witnessed firsthand how this mindset can lead to failed transactions, accepting a low offer, post-transaction legal issues, and other consequences. 

Selling Your Home 

While most of us know the sale will involve selecting your agent, taking photos, listing the property, hosting showings, getting offers, negotiating, conducting inspections, and closing. At close, you give the new owner the keys and walk away. The home is their responsibility in its entirety.  

What Happens When You Sell Your Business? 

Selling your business is more like selling 60% of your house while continuing to live in it while the new owner remodels the kitchen, outsources the landscaping, and moves their family in to cohabitate with yours. 

The Difference 

• People Stay: Your employees don’t move out. They will adjust, align, and thrive under the new ownership that you’ve selected. This highlights the importance of culture fit between your business and the buyer. 

• You Stay: Most transactions involve the owner staying on for 6-24 months to assist with the transition, growth, and a performance-based earn-out. 

• Financials Examination: Unlike a home appraisal, a business valuation involves forensic-level analysis.  

  
  

• Deal Structure: Ideally, you will have at least two deal structures to choose from. Today, 100% cash at close is very rare, so deals will include roll-over equity, earn-outs, seller notes, etc. 

• Your Business: Any business includes your people, your brand, your legacy, and your relationships. It is a transition to the buyer you’ve selected, not a clear-cut sale. 

Where does the Comparison Fail Business Owners? 

Imagining that the sale of your business will mirror a real estate deal creates false confidence, misleading owners towards: Undervaluing advisory, misjudgment of the emotional side of selling, neglecting strategic planning around pre- and post-sale, and ignoring risks tied to confidentiality. 

At IT ExchangeNet, a lack of preparation and understanding is one of the many reasons we see deals fall apart or worse, deals being completed for less than market value. So, remember that selling your business is a transition and not just a transaction. 

IT ExchangeNet has helped 260+ IT and Digital Marketing firms successfully make this transition. If you are interested in exploring our advisory services, contact us at www.itexchangenet.com/contact-us.