INDEPENDENCE DAY – Selling your Business
Five Ownership Questions before you Prepare to Exit
Two hundred and fifty years ago this July 4th, the founders of this country didn’t simply declare independence. They prepared for it. They weighed the costs, understood the stakes, and they made a deliberate decision to act from a position of readiness. Our nation’s founders said “….we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.”
Equating the concerns of selling a business to that of founding a nation is hyperbolic, by design. There are common parallels to consider. What questions should an owner ask before selling their business?
America will mark a quarter-millennium of independence this summer. It is the kind of anniversary that stops you. It invites reflection. And for the hundreds of thousands of business owners who have spent decades building something of real, enduring value, it raises a question worth sitting with: Are you ready for your own independence?
Not the independence you already have — the one you’ve earned through years of risk, sacrifice, and outright stubbornness. I mean the independence that comes on the other side of a successful exit. The financial freedom. The legacy secured. The next chapter, on your terms.
For most owners, that independence is closer than they think. And for most owners, they are far less prepared for it than they realize.
A Wave That Cannot Be Stopped
In GALE Force, scheduled to release July 27th, 2026, we document a number that is easy to say and hard to fully absorb: there are approximately 320,000 businesses in the United States with annual sales of $5 to $100 million. Most of them are owned by Baby Boomers. Seven in ten of those owners will have to hand over the reins in the coming decade — whether they choose to or not — based solely on their age.
When we narrow the lens specifically to industrial businesses likely to enter the market as acquisition targets, drawing on data from DealStream and other sources, we identify approximately 7,400 businesses with $5–$100 million in sales where the owner will soon be aging out and there is genuine uncertainty about what comes next.
PwC’s analysts offer the clearest picture of where these businesses are likely to land: 41 percent will be handed to the next generation, 11 percent will transfer ownership but not management, and 30 percent will sell to a third party. Assuming PWC’s model is in the ballpark, the M&A opportunity in the lower middle market is generational in its scale.
And the buyers are ready. Private equity dry powder sitting on balance sheets reached roughly $1.2 trillion in 2025, with an estimated 25 percent of that capital held for four or more years — creating intense pressure to deploy. Sovereign wealth funds command an additional $13–$14 trillion in assets, with a growing share targeting direct investments and higher yields. Top executives at Ares Management, Blackstone, and KKR reported a 2.5x bump in NDAs signed in 2025, signaling that the deal cycle is accelerating.
The capital is there. The buyers are motivated. The question is whether the sellers will be ready.
Most Sellers Won’t Be Ready
Here is the uncomfortable truth we encounter regularly in the lower middle market: businesses with real value that cannot articulate it, cannot document it, and cannot substantiate it will lose money at the deal table. Not because the business isn’t worth what the owner believes. Often it is. But because a buyer’s valuation is not built on belief — it is built on evidence.
Selling your business requires discipline. The exit you deserve will not happen by accident. It will happen because you built toward it.
The Five Questions Every Owner Must Answer
Across decades of operating, acquiring, and advising on transactions totaling more than a billion dollars in combined value, I have found that exit readiness comes down to five questions. Most owners cannot answer all five with confidence. The ones who can are the ones who command premium multiples.
1. Can My Business Run Without Me?
This is the first question buyers ask — often before they ask about revenue, margin, or EBITDA. A business that depends on its founder for relationships, decisions, or institutional knowledge is not a business. It is a dependency. And buyers do not pay business multiples for dependencies.
The answer to this question is complex and tailored to both the business type and stage of growth. Buyer’s rarely have talent that is sidelined to run your business. They are looking for a team on the field and coaches with experience. The owner must ask a difficult question. It is an emotional question. Can my business run without me? Are my people prepared to lead? A transferable business is a valuable business. The two are inseparable.
2. Do I Know What My Business Is Actually Worth — Not What I Think It’s Worth?
In 2025 I had a call with a small business owner. I asked them what their business was worth. Their answer was telling. It began with them outlining the debt, time and personal investment they made to build the business.
One of the most consistent deal killers in the lower middle market is emotional valuation: an owner who prices the business on sweat equity, retirement needs, or a neighbor’s anecdote rather than on what the market will actually bear after peeling back every layer and stress-testing every assumption.
During a follow up conversation, I asked them a question. What would you pay for your business. Founders often have 50 to 80 percent of their net worth tied up in the business. That concentration creates pressure — and pressure distorts judgment. Closing the gap between owner expectation and market reality is crucial, and it typically requires an independent valuation or a banker-led assessment well before the process begins. The earlier you know the real number, the more time you have to close the gap if one exists.
What a business is worth is tied to an owner’s expectation but requires a buyer’s approval. Owner’s need more information and having outsiders assess this with them is of great value.
3. Are My Financials Clean, Accurate, and Defensible?
Diligence is where preparation pays off — or fails to. A buyer will look under every floorboard and behind every firewall they can access. Financials, contracts, customer histories, HR files, tax exposure, litigation, compliance.
Messy books destroy confidence, slow timelines, and invite suspicion. Clean financials don’t just make diligence easier. They increase the multiple.
To be ready, financials must be GAAP-compliant or equivalent, clearly broken down by product, customer, and geography, transparent about any adjustments, and audit-ready. The prepared seller experiences diligence like a checklist. The unprepared seller experiences it like a siege.
All diligence is difficult. It is about as fun as a root canal. Preparing for due diligence is worthwhile and will make the process smoother and will invite improved multiples.
4. Is My Business Too Concentrated with dependence upon One Customer, Supplier, or Person?
If 40 percent of your revenue comes from a single customer — or one vendor supplies the majority of your inventory — the buyer sees fragility where you see loyalty. Concentration risk is one of the most reliable valuation depressants in the lower middle market. It signals that the business is not a platform; it is a relationship. And relationships don’t survive ownership transitions the way systems do.
This question seeks to uncover concentrations and will offer the owner an opportunity to address these. The remedy may require time to broaden the customer base, diversify suppliers, and reduce single points of failure — operational, relational, and human. Even modest improvements here can meaningfully increase a buyer’s appetite and the multiple they are willing to assign.
5. Can I Clearly Explain and Demonstrate Our Strategy, Systems, and Culture So a Buyer Can See, Trust, and Step Into Them?
A surprising number of companies grow without ever articulating a clean strategic plan. They operate on instinct, habit, and market pull — but not on documented, measurable strategy. Buyers notice this because they are not only acquiring what the business is today. They are acquiring what it can become under new ownership. And they need to see the blueprint.
Tools like strategy maps, scorecards, and performance dashboards signal discipline. They tell a buyer: this company plans, executes, measures, and adjusts.
Culture, too, is an asset that must be visible — not a personality, but a system. High customer retention, measurable employee engagement, and codified values that are practiced are the markers buyers are looking for.
Many sellers benefit from a strategic assessment process, allowing them to hone and document their strategy before an exit.
A business with a well-defined and internally understood strategy will improve the performance of your business, its attractiveness and its valuation.
The Exit is more a shifting of gear and not a finish line
In GALE Force, we describe the moment when a prepared owner transitions from running the business to positioning it as entering the “exit chute.” The metaphor is deliberate. The exit chute is a mental transition as much as an operational one. You shift from grinding to curating. From executing the quarter to presenting the value you have built over years.
That shift is exhilarating and disorienting in equal measure. But owners who make it deliberately — who have done the work of preparation before the process begins — navigate it with clarity. They do not merely survive the transaction. They maximize it.
America’s founding and system of government has brought profound liberty, ingenuity and wealth to the world. This has made the USA the best country to build a business on the planet. US independence is not seized. It is earned, prepared for, and then orchestrated from a position of strength. The capital is available. The buyers are ready.
The only question remaining is whether you are.
Give us a call to chat about the sale process and how to navigate it with improved confidence and results. www.resurgenceadvisory.com/appointments.
About the Author
J. Michael Coffey is the founder of Resurgence Advisory and the author of GALE Force: Navigating Strategy, Culture, and Value Creation in Modern M&A. Over thirty years, he has built and sold companies, led more than thirty-eight transactions, and guided lower-middle-market industrial businesses through exits totaling more than one billion dollars in combined value. Resurgence Advisory provides sell-side M&A advisory to business owners who are ready to get the most from everything they have built.
www.jmichaelcoffey.com www.resurgenceadvisory.com
Sources & References
J. Michael Coffey. GALE Force: Navigating Strategy, Culture, and Value Creation in Modern M&A. Entrepreneur Books, July 2026.
DealStream. Lower Middle Market M&A Database. Referenced in GALE Force for industrial business pipeline estimates.
PwC. Family Business Survey. Succession and transition data: 41% next-generation transfer, 11% ownership transfer without management, 30% third-party sale. pwc.com/familybusiness
Bain & Company. M&A Report 2026. Private equity dry powder, deployment trends, and deal cycle activity. bain.com/insights/topics/m-and-a-report
Morgan Stanley. Private equity capital deployment estimates; $1.3 trillion in capital ready to invest; approximately 10,000 portfolio companies. Referenced in GALE Force.
IFSWF / Preqin. Sovereign Wealth Fund Institute. Global sovereign wealth fund AUM estimates of $13–$14 trillion. ifswf.org
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