Why most businesses cannot be sold

A promoter spends thirty years building a business, decides it is time to exit, and discovers something unpleasant: the offers are far below what the earnings would suggest, or there are no offers at all. The instinct is to blame the buyers. The reality is usually that the business, in its current state, cannot be bought.

A buyer is not purchasing last year's EBITDA. They are purchasing the probability that it continues after the person who created it leaves. Every dependency on that person is a discount. Every undocumented process, every price approved personally, every relationship that exists in one man's phone — priced in, downward.

The recurring findings are almost boringly consistent. Financials that don't reconcile to filings. Revenue concentrated in two accounts. Related-party rent with no agreement. No MIS. Informal employment arrangements. Processes that live in memory. Each is survivable in operation and expensive in diligence.

The second problem is process. Most SME transactions happen because one interested party approached the promoter. With a single counterparty there is no competitive tension, no benchmark, and no leverage — and price in a transaction is set by competition, not by argument.

The encouraging part is that all of this is fixable, and the fixing is worth more per hour than almost anything else a promoter can do at that stage. Eighteen months of deliberate preparation — clean books, a real second line, reduced concentration, formalised arrangements, documented systems — routinely moves the closing multiple by more than the entire cost of the exercise.

The best time to make a business sellable is several years before you intend to sell it. The second best time is before you talk to the first buyer, not after.