Three Tips from a Leading M&A Expert on Selling Your Business

An interview with Sharon Heaton, CEO of sbLiftOff, a lower mid-market M&A advisory firm.

Sharon Heaton is a leading expert in the traditionally male dominated M&A industry. As the CEO of sbLiftOff, she has more than thirty years of experience in M&A and banking. Her experience also includes time as a lawyer, business executive, and senior Senate staff member.

Heaton has been dubbed one of the “50 Most Influential Women in M&A” by BDO, and she is a well-known national thought leader on mid-market acquisitions. I recently spoke with her about the growing M&A market and what businesses can do to prepare for a potential transaction.

It’s “a seller’s market” she said of the current boom caused by record-low interest rates and high valuations. Heaton offered three critical pieces of advice for business owners who are considering selling their company:

Try Not to Get Emotionally Attached

Emotional attachment is something that Heaton sees happen time and time again. Business owners spend years, sometimes decades, building up their company. They can be understandably attached to it and have a hard time letting go, or feel insulted if an offer comes in that is lower than they think it should be.

“Every company has challenges,” she told me via Zoom. “Sometimes business owners have a hard time seeing the challenges of their company and kind of get their ego hurt when a buyer comes in [and starts pointing out some of the challenges].”

She added that sellers must try to see their business from the buyer’s perspective. “Why is it a good idea for them to buy your company? What can they do with it? And you know, it’s got to be a good transaction, not only for the seller but for the buyer as well.”

Buyers Don’t Like Sudden Upticks

Heaton also warned business owners against expecting a “hockey stick” graph when it comes to the sale of their company.

“Don’t count on the hockey stick,” she said, “don’t count on I’m going to keep my revenues pretty much flat for three or four years. And then I’m going to jump them and jump my profitability in the year before I go to market. And then somebody will pay me on that hockey stick. Buyers don’t like hockey sticks. And they question whether or not that’s going to be repeated.”

Instead, Heaton used a baseball analogy for sellers to keep in mind: “It’s a little bit like when Babe Ruth hit a home run and basically went up to the plate and said, ‘I’m going to hit it over there,’ and then knocked it to exactly that place. If we can basically have sellers who are identifying, ‘we’re going to be at this level in two years and this level in three years.’ And then they do that. That is an incredibly solid story.”

Buyers Need a Path to Growth

If you want to sell your business for top dollar, Heaton said, it’s crucial for sellers to at least have a vision of where they want to take the company in the years ahead. Having a clear vision, she said, allows M&A advisors like herself to create a story for buyers that outlines how they can grow the company.

“It’s very important to buyers, who are paying a multiple of EBITDA for the seller, that the seller understands that the buyer is giving away profits for the next several years, they need to see a path to growth because otherwise, it doesn’t make a lot of sense. Sellers are often in a better situation to help buyers see where the growth can come from,” she said.

Heaton’s years of experience and national prominence have made her a go-to authority on M&A. When it comes to selling your business, following her advice could help you get the best possible outcome.

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By Lou Sokolovskiy, Founder & CEO at Opus Connect
March 2022