How To Sell Your Business

Selling a business isn't just a transaction. It's the moment you realize all those late nights, tough decisions, and years of effort have to be translated into a value someone else is willing to pay for. The challenge isn't just finding a buyer. It's making sure what you've built is truly ready for the next chapter and that you're not leaving money on the table when the opportunity comes.

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  Marketers know that feeling. They optimize for the numbers that look great, like impressions. But then we don't see revenue. LinkedIn has a word for that: bull spend. Instead, you can get the highest ROAS of major ad networks with LinkedIn ads. Cut the bull spend, advertise on LinkedIn. Spend $250 and get a $250 credit. Go to LinkedIn.com/MBAShow. Terms apply. So you decided to sell your business. And even if you haven't, you can't take it with you to the tomb like your Uncle King Tut. We all have to sell at some point. Selling your business is a big move, and it's a move that takes proper planning long before you actually sell your business.

• 1:28Speaker 00

  The moment you decided to sell your business is the moment the work starts, where you start preparing for sale and increase the value of your business so that you get the most for your hard work. Nothing about today's episode is theory. I'm going to be sharing with you practical, real-life stories and examples from when I sold my business, Webinar Ninja, our software company, that we grew for 10 years and got acquired in 2024. I'm going to show you how to prepare for the sale, all the steps in between, and how to get that perfect buyer. Let's go.

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  Welcome back to the $100 MBA Show. I'm your host, Omar Zenhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday, to help you start, grow, and scale your business.

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  The main reason why entrepreneurs struggle to sell their business is because they don't really know the process and what it looks like. So it feels overwhelming. So what you do is you just put it off. You put off even thinking about selling your business, and therefore, your business is never ready for sale. But things need to be in place. Your business has to be prepared for sale, all your ducks in the row, well before you actually start entertaining offers. Selling your business isn't just about finding the perfect buyer. It's also about becoming the right business to buy before the buyer shows up. Your business might work for you, but is it a business that you can hand over to somebody else and they can run with it and make money just like you did?

• 2:58Speaker 00

  When we sold our company, Webinar Ninja, it was after 10 years of building and growing it. Now, in that time of those 10 years, we would get about two to three emails a week from people wanting to buy our company. We were a well-known competitor in the webinar space, and we were a growing asset. So people were approaching us with offers left and right. But when we were receiving these offers, I knew in the back of my head that it's always best to sell a business on the way up. You don't want to sell your business when it's stagnating or even on the way down. You're losing all kinds of leverage when you are not in a growth phase. When you sell your business, when you're growing, month over month, the buyer, all

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  they see is potential. But if they see a dip, and then you go up a little bit, then another dip, then another dip, month after that, it looks kind of shaky, and the value of your business isn't so valuable. When you sell on the way up, you're going to have the pick of the litter. You're going to be able to choose any buyer that's perfect for your customers. Got to keep that in mind. It's actually better to sell a little bit early than a bit late. So let's say you made the decision to sell your company. What's the first step? Well, step one is to spend the next six months getting your business ready for sale. Now, why do I say six months? Because this is going to take a bit of time, and you're running your business. I get it, you're busy. You're trying to grow.

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  You're trying to compete with the marketplace, and you don't have a lot of spare time. So we're going to spread it across six months, so that way, we get it done. So what are we going to do in these six months? Well, we're going to do three things. We're going to do, number one, grow your EBITDA. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. EBITDA is just a fancy term for basically the revenue that you make before all the things that we just mentioned are in play. I would also make sure that you take a look at your profitability. This means you're going to have to take a close look at your expenses and cut anything you're spending on that you don't need to actually spend on to run your business.

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  Part of that cutting process is also going to your current suppliers, vendors, and negotiate with them for better rates. Maybe go to an annual price, so that way, you're saving a bit of money over the long run. In these six months, you really want to maximize your revenue and growth. Maybe stack a few offers, sales, launch a few new products or offerings that you might had in your mind or have been thinking about for a while. This is when you're going to put things into overdrive. Why? Because you want to show for these six months, you've really done everything you can to grow the business, and you have some data to prove it. Now, I said you're going to do three things in the six months. That's just the first thing. The second thing is that you're going to document everything.

• 5:47Speaker 00

  I'm talking about every single procedure in your business. This is often called as an SOP, a standard operating procedure. Basically, an SOP is a document. This could be a Google Doc where you are writing down the steps of how to do anything in your business. For example, if you have a website, how do you publish a blog post? What are the steps involved in that process? So somebody has to write it, somebody has to edit it, somebody has to post it on the WordPress website, for example. Somebody's got to schedule this so that it publishes on time. There are different steps involved. What are those steps? Who does what? And that's just one task, one activity in your business. When we sold Webinar Ninja, we had over 400 SOPs.

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  Yes, we had a playbook for everything, from how we deployed code, to how we make a hire, to how we process a refund, everything. On top of the SOPs, we also had about 50 to 60 screen share videos. This is when we recorded our screens to show how to do anything that's a little bit complicated that can't be explained simply in a document. This practice alone will increase the value of your business, whether you sell it or not. Why? Because if a buyer comes by and looks at all this documentation, what they see is, I can take your business and earn money from day one. Handing over this business is not a chore. It's actually going to be super simple, and I'm going to get a return on my investment

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  and return on the purchase of this business as quickly as possible.

• 7:21Speaker 01

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• 8:53Speaker 00

  So number one, you're going to increase your revenue or your EBITDA. Number two, you're going to document your SOPs. Number three, you've got to clean up your books. If you haven't invested in a solid bookkeeper, accountant, financial advisor for your business, this is the time to do it. You need to make sure that your books are rock solid, that all your accounts are reconciled, all your tax returns are done properly and tidy, your accounting software is clean, and everything is accounted for. Why? Because when somebody buys your company, they're going to know everything about your business, and the first thing they're going to look at is your financials. Often, the offer that a company will make to buy your business is contingent on due diligence.

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  Due diligence is a stage where they learn everything about your business, and that includes the numbers. So you want to make sure there's no skeletons in the closet. You want to make sure it's super clean, because when you go through due diligence, you want to be able to hand things on a silver platter and say, hey, everything's in order and ready for you. This is actually not as intimidating as it sounds. A lot of this can be done within a few weeks, but many small business owners, they kind of just do this once in a while. They don't really keep clean books until it's time to do it at the end of the year or whatever it might be. I personally believe, as a business owner, having a great bookkeeper and a solid account that you can count on are two hires that are going to pay in miles.

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  It's going to pay incredible dividends for you, because they're going to be able to show you where your bucket is leaking and where you're losing money, but also how to maximize the value of your business and increase profits in small, little things that you can do. So step one is to do those three things, right? Increase your EBITDA revenue, make sure you're documenting SOPs, and to clean up your books, your financials. What's step two? Step two is to find a buyer, okay? Or buyers, I should say. And what we did was really helpful. What we did is we wrote down a list of our target top 50 companies that would benefit the most from acquiring us. Guess what? That list includes your competitors, includes any company that's adjacent to your industry.

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  For example, for Webinar Ninja, there are many companies that are going to benefit in including a webinar solution with their product, like an email marketing product or even a CRM product. And the great thing is that if your business is doing well and you reach out to them, it's going to be an easy response. And one of the things I always tell people is that if you're selling your business, all you need is two offers to be able to get great value, because now you have a bidding war, you have competition. Now, when you approach this company, when you email this company that might acquire your business, that might be a good buyer, you don't need to give them a whole, long story. You can just give them a seven-slide deck that is an overview of your business and how well it's doing.

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  Think about what the buyer really cares about: your revenue, your margins, your customer base, how long they've been with you, how long you've been doing this, maybe your traffic to your website, the important stuff. This is enough to allow the conversation to happen. If they see the deck, they like the numbers, they like what they see, they're going to be like, okay, let's have a conversation, let's have a video call. I know a lot of people don't like reaching out to people directly, they don't like cold emailing people. I get it, it's a little bit intimidating, a little bit awkward, but honestly, it's where you're going to get the best deals. But if you want to, there are marketplaces where you can list your company, like acquire.com or Flippa. This is like Facebook Marketplace for businesses. What's good about these platforms is that you don't need to publicly say what your

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  company's name is. You can kind of be anonymous. You can talk about your business, what it does, and all the hallmarks of it. You could talk about your revenue and all your stats, and they can inquire about this. And then, once they inquire, then you can share when people are interested. So it's not like public knowledge on the web. Maybe you're not 100% ready to sell, but you want to see who's interested in buying your company. Now, when it comes to finding the right buyer, there are two types of buyers you need to know. There are strategic buyers that are buying because they're going to have a strategic advantage by buying your company. They're going to be able to one-up their competition. They're going to be able to compete better with their competition if they have your business.

• 13:16Speaker 00

  And strategic sales or strategic buyers usually pay more than somebody's just acquiring you purely on your profit and your numbers. The other type of sale is a financial sale, where they're like, hey, this business is making money, they're making great profit, their EBITDA's solid, I just want to buy this business so that I can increase my own revenue and take that money for myself. This is still very powerful if your business is doing well, but it's not as strong as a strategic buyer. This is why I told you to make that list of 50 potential buyers, because many of those people will pay top dollar for your company so they can have a strategic advantage against their competition. Quick pause. If you're finding this episode helpful, then I highly recommend you subscribe to the podcast on whatever platform you're using, because we have an upcoming episode I don't want you to miss.

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  It's called "The Five Secrets to a Successful Software Business." I share with you the five critical things that we did in our business, Webinar Ninja, that made us one of the leaders in the marketplace in webinar software. If I had to do it all over again, I would do these five things, and these five things only, because this is all that matters. Make sure you subscribe so you don't miss that episode. Step three, don't get anchored on the first number. When you set your asking price, potential buyers will come back with an offer that's almost always a bit of an insult, a bit of a gap, a bit of a lowball. Don't get discouraged. This is just the beginning of the process. If they offer less than what you wanted, you can always bridge that gap. This can look like a lot of different things.

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  You can say, hey, I want $5 million for my business, for example, and they offer you 4.2, and you're like, well, that's not what I asked for, that's not what I want. Don't get angry, okay? You can shore it up by saying, hey, how about yes, 4.2, but I'm going to get $800,000 more after I hit these milestones when I vest during my vesting period in that company. So let's say I sell the company to you, I work for you with a salary and everything for a couple of years, and I have two years to hit certain milestones. If I do, I get a lump sum of 800K, or there's an earning out potential of every year or every quarter I hit those milestones. Everything's in a negotiation, so you can fill the gap with maybe stock of that actual company that's acquiring you.

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  Maybe you can get the extra 800K in this example as a consulting fee over a certain period of time where you are consulting with them to help them make that transition. You have to understand, maybe the company can only really spend X amount of money in this acquisition, they're offering that much, so maybe in a year or two, they can give you more. So see if you can work something out. Don't get discouraged. But most of all, don't get offended and don't get angry, because it's a small world. People talk and word gets around. Be professional, be polite, be kind, and try to get to a point where both of you feel like you've got to win. Step four, get through due diligence and set up for the transition after you sell.

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  Once you have an offer and you sign off on that offer, that offer is contingent on due diligence. Due diligence is basically a chance for the buyer to make sure they are getting what they think they're getting. This means they're going to go through everything: your financials, your products, your code, if it's a software company, if it's a physical product, your production line, your infrastructure, how you deliver the product to the customer. They're going to look at everything. In this process, both of you are going to sign an NDA, non-disclosure agreement, which means you can't tell anyone about what's going on until the sale is final. This is very important, because you need to respect the NDA, because it's a legally binding contract. You need to know exactly who you can and cannot talk to about this sale.

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  Lucky enough, my wife is my co-founder, so she was a part of the company, so I could talk to her. She was a director, she's a company founder, so she's part of the negotiation, so at least I could talk to my wife. But your situation might be different with your significant other. More importantly, you can't talk to your team about this, which is a little bit strange. You know that you're about to sell your company, and you can't talk to your team about what it looks like for them in the future. You've got to act like everything's the same as usual. You might even know that some of their roles will disappear, but you can't say a word until it's all final. You have to understand that this due diligence phase is very sensitive. The deal can fall through for any reason, so staying quiet will protect everyone involved

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  until it is public. And usually, it's made public through a PR announcement, through a press release. Once our press release was published on Yahoo Finance, we knew that it's okay now that it's announced to talk about the sale of this business. And this is when the transition starts, where you actually have to talk to your team and talk about what it looks like for the next few months. They're going to need to help the new buyer and their team transition, how they are going to function in this new business and new environment. Who's staying on? Who's moving on with the new company? And who doesn't have a place in the new company and needs to start thinking about their next move and their next job?

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  You need to also understand that with most sales of a business, you are going to be legally liable for a certain period of time. This is most definitely going to be part of the contract between you and the buyer. Why? Because you might have made a decision in the past that is going to affect the company in the future or in the present. So they want to make sure that, hey, there is a legal window, like say, for example, 12 months, 18 months, where you maybe need to testify or show up to court if something happens, and you are part of a decision that happened when they were not in charge, when they were not the actual owner of that business. So even though you signed on the deadline and you got through due diligence, and maybe

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  the money's in the bank, you might be feeling, oh, so relieved, but you won't be completely relieved until that period is over. And it's actually a good thing, because in that period, you could start thinking about what your next move will be. What's your next venture? Will you retire and start enjoying your retirement and the money you got from the sale? Or are you going to move on and invest in a new business, buy a new business, start a new idea? This window of 12 months, 18 months, whatever's in your contract, is a good chance for you to think about something before you rush into it. By the way, this is very common with entrepreneurs who just sell their business. They rush into the next idea because they can't stay still. They can't just like relax for a moment and give themselves a chance to think about

• 19:47Speaker 00

  what's the best move for them as a next step. To wrap up today's episode, selling your business is a big move. It's probably one of the biggest transactions you'll ever make in your life. I mean, this is bigger than buying a house, buying a car, anything. So there's a lot on the line and there's a lot invested in the years and blood, sweat and tears you put into this business. So you want to get it right. So this is why you shouldn't rush it and you should start even those six months preparing for that sale by making sure all your ducks in a row, everything is in order, your numbers are clean, your SOPs are there, your revenue is where it needs to be and on the up and up. So even if there are no buyers six months after you're done with that process, you're already at any point when somebody makes an offer that looks great, you could take it.

• 20:33Speaker 00

  What I share with you today is basically the most important things I took away from my experience of selling my business, my baby Webinar Ninja, after building and growing that business for 10 years. A lot of people ask me, would I do anything differently if I got the chance to do it again? And the honest truth is, no, I wouldn't. I'm actually really happy with the way things worked out and that's why I created today's lesson, because I wanted to share with you something that really was my proudest moment in business, where I actually was really happy with who we chose as a buyer and the whole process was actually really well thought out and planned out because I had 10 years to do it and prepare for it. If you liked today's episode, if you got a lot of value from today's episode, then

• 21:16Speaker 00

  I highly recommend you check out an episode we recently published called "How to Make Your Next Hire a Step-by-Step Guide to Hiring Top Talent." Part of growing a valuable company is growing a great team and increasing the value of your business by increasing the talent density in your business. Go ahead and check it out. It's called "How to Make Your Next Hire a Step-by-Step Guide to Hiring Top Talent."

• 21:39Speaker 00

  If you found today's episode helpful and you want more practical business lessons to help start, grow and scale your business, subscribe to the podcast. All you gotta do is hit subscribe or follow on your favorite podcast app, the one that you're using right now. By hitting subscribe, you get our next episode automatically. It's absolutely free and it's a way for you to commit to growing your business. I'll check you in the next episode.

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