The Truth About Business Valuation and Risk
Selling Your Business Is a Strategy Decision, Not a Transaction
Words by
Carl J. Cox
For many business owners, their company represents decades of work. It may also represent their retirement plan. Yet most owners spend far more time planning growth than planning their exit. In this episode of the Measure Success Podcast, hosted by Carl J. Cox, CEO of 40 Strategy and 40 Accounting, sits down with Gregory Kovsky, President and CEO of International Business Associates, to talk about what actually happens when owners decide to sell. With more than 30 years of experience in business brokerage and thousands of completed transactions, Gregory offers a clear look at today’s market and the realities owners face.
Why This Market Looks Different
Gregory explains that the current market for privately held businesses is one of the most active he has ever seen. Many baby boomer owners delayed selling during COVID and are now ready to exit. At the same time, buyer demand remains strong.
Strategic buyers want to grow through acquisition. Private equity firms and family offices are sitting on significant capital. High-net-worth individuals are choosing ownership over traditional employment. Even younger professionals are entering the market through search funds.
This mix of sellers and buyers creates opportunity, but only for businesses that are prepared.
Why Most Businesses Never Sell
A key insight from the conversation is that only a small percentage of businesses ever change hands. Many fail to sell because the business model no longer works, the owner has unrealistic expectations, or the company cannot be financed.
Gregory explains that selling a business requires clearing several hurdles. The buyer must see value. Their financial team must agree the numbers make sense. Attorneys must assess risk. Lenders and investors must approve the deal. If any one of those groups says no, the deal stops.
This is where many owners are caught off guard.
Assets Do Not Always Mean Value
One of the most misunderstood ideas in business sales is asset value. Owners often assume that equipment, inventory, or real estate automatically increases price. In reality, buyers focus on return.
If assets do not generate profit, they can become liabilities. Deferred maintenance, aging equipment, and excess inventory often reduce value rather than increase it. Gregory explains that buyers look forward, not backward. They care about cash flow and risk.
Why Brokers Matter
Carl and Gregory discuss why working with a professional broker changes outcomes. A broker understands market dynamics, valuation drivers, and financing constraints. More importantly, a broker creates competition.
When owners sell directly to one buyer, they often leave money on the table. A structured process brings multiple buyers to the table, which increases leverage and improves terms. Even after fees, owners often net more.
Just as important, brokers help owners avoid structural mistakes that can derail a deal late in the process.
Understanding Deal Structure
Not every sale is all cash. Many deals include seller notes, earn-outs, or retained equity. Gregory explains how each option carries risk and reward.
A second payout can exceed the first if the business grows. It can also disappear if the market changes or new competition emerges. Owners must understand their risk tolerance and financial needs before agreeing to structure.
Selling a business is not just about price. It is about certainty, timing, and control.
Plan Before You Need To
One of the strongest messages in this episode is the importance of planning early. A business is not a liquid asset. Sales take time. Transitions take longer.
Owners who plan years ahead have options. Those who wait often do not.
If your business is part of your long-term financial plan, this episode will help you think differently about value, timing, and strategy.
Listen to the full conversation and start planning your exit with intention.
