For many business owners, selling their company feels like the final step before retirement. You pick a date a few years down the road, keep building the business until then, sell, and move into whatever comes next. In reality, those timelines rarely line up that neatly.
In this episode of the Transaction Abstract Podcast, Redpath’s Joe Hellman sits down with Mo Gharib, partner and co-founder of Vermillion Capital, to discuss one of the biggest questions business owners face: When is the right time to think about a sale process?
Mo works with business owners, families, and closely held businesses across a wide range of industries and transaction sizes. Through that experience, he encounters a common challenge: Owners often start thinking seriously about a transaction much later than they should.
This conversation makes the case for evaluating your options sooner. If you know where you ultimately want to end up, working backward can give you more time to prepare the business, understand the market, and make decisions on your terms.
Based on experience, here’s what business owners should consider.
If you want to retire in three to five years, then waiting three to five years to begin thinking about a sale could put you well behind your intended timeline.
As Mo explains, “I think what a lot of business owners underestimate is that the best time to prepare for a sale is actually well before when they think they'll want to sell. We meet with a lot of business owners who tell us they want to own their company for another three or five more years, and then they’ll be ready to retire. The reality is that if you want to retire in three or five years, you need to start thinking about a sale today, not when you reach the end of that time frame.”
Selling a business and leaving a business are often two different events. Many owners remain deeply involved in their companies. They hold important customer relationships, make key decisions, lead employees, and carry institutional knowledge that isn’t easily replaced. Buyers recognize that value and will often want an owner to remain involved for a period after closing.
That reality is another reason Mo encourages owners to consider the transition period. “More often than not, the business owner has been spending a lot of time working in the business and not on the business. They're critical to the business, fully enmeshed and ingrained in the operations. In almost every case, the buyer is going to want the owner to remain involved for some period after closing, at least a year, and usually longer.”
With this in mind, if you begin the sale process at the point when you want to retire, you may discover that retirement is still several years away. Instead, start with the date you ultimately want to step away and work backward. That creates room for the transaction itself, the transition period, and the succession planning that may need to happen along the way.
A sophisticated management team can change the equation significantly. If the business already has leaders who can step into the owner’s responsibilities, a buyer may be less dependent on the seller after closing. For many closely held businesses, though, that structure isn’t yet in place. Starting the conversation earlier creates time to develop a succession plan and gradually shift responsibilities away from the owner.
Mo shares, “Even when there's not an obvious internal successor, selling earlier allows the owner to work with the new partner to recruit, develop, and identify the right person, then help transition that person in successfully. This translates into a much higher degree of confidence among the buyer pool, which then translates into a much higher certainty of closing.”
While this preparation doesn’t automatically result in a higher valuation, what it can do is reduce uncertainty for prospective buyers and increase confidence that the business can continue performing through an ownership transition.
Understand What Different Buyers May Expect
Your post-sale role can also depend on who buys the business. Different buyers bring different expectations to the table.
Private equity buyers will typically require the seller to roll a portion of their proceeds into the new ownership structure. For an owner who expects to continue working for several more years anyway, selling earlier can create an opportunity to remain actively involved while that investment moves through its next stage. The owner still has the energy, influence, and involvement to help drive performance, support the new partnership, and potentially participate in additional value creation.
Strategic buyers can look different. Depending on their existing team and resources, strategic buyers may require a shorter post-close time commitment and may not require the same type of equity rollover.
Understanding these differences early can help you evaluate your options based on factors beyond just purchase price, making room to consider what life after closing could realistically look like.
Sometimes the decision arrives before the owner is ready.
As Joe shared, “I see this quite a bit within people that I work with. There are some pretty sophisticated M&A departments out there now sourcing deals. When that phone rings, an owner may not be looking to sell, but now someone's telling them they want to give them an offer. That changes the whole dynamic of waiting three to five years in those situations.”
Suddenly, a business owner who wasn’t actively considering a sale has an offer in front of them and a short window to respond. When a private equity firm, strategic buyer, or internal M&A team expresses interest, it can create pressure to act quickly. This is when it’s important to remember that an unsolicited offer doesn’t mean you have to abandon a thoughtful process.
As Mo explains in the episode, you only get one chance to sell your business. If you’re genuinely interested in exploring a transaction, bringing in an advisor can help you understand the market, create competition, evaluate alternatives, and determine whether the offer in front of you is really the best opportunity.
It’s one of the reasons Mo suggests working with a firm like Vermillion Capital. “We'll run a process, create competition, maximize value, and deliver you with options so that you can make the best decision for yourself as the business owner and your constituency, whoever that may be. It may be other shareholders, it may be your employees, it may be the community, it may be your customers. But rarely is your first offer your best offer.”
If a buyer is genuinely interested in the business, running that broader process shouldn’t eliminate that interest. In fact, resistance to a competitive process may tell you something important about the original offer. If a buyer says, "If you hire an advisor, then we're not interested anymore,” that tells you they don't want to compete, and whatever they were going to offer you probably wasn't market value for your business.
One concern owners may have about going to market is the amount of work involved. If there’s already an interested buyer, why not simply negotiate directly and avoid the complexity of a broader process?
The reality can be very different. In a one-off transaction, the business owner may be responsible for managing communications, answering buyer requests, navigating due diligence, and negotiating terms, all while needing to successfully run the business at the same time. An investment banking advisor can take on much of that workload. They can prepare marketing materials, communicate with buyers, manage the process, help coordinate diligence, negotiate on the seller’s behalf, and keep prospective buyers accountable to timelines and milestones. Without an investment banker holding the buyer’s feet to the fire, buyers will often let timelines drag out on the seller.
Mo explains the role an advisor can play. “When you hire an advisor, they're going to craft the marketing materials. They're going to go and solicit the buyers. They're going to tell the story to the buyers. They're going to communicate to the buyers, and they're also going to help manage all the due diligence. They're going to take the business owner out of the seat of having to negotiate with the buyer.”
While it may seem counterintuitive, running a full process would actually be less work for the business owner than trying to do it themselves in a one-off deal with a single buyer. The structure an advisor provides can create competition while also allowing the owner to stay focused on the business. It also keeps the process on a timeline and holds buyers to milestones.
The right time to sell will look different for every business owner. The better question may be when you should start preparing for the possibility.
Starting early gives you time to develop your management team and strengthen your financials. It also creates time to think through what you want after the transaction, and to evaluate an unexpected opportunity without feeling forced into a decision.
If your goal is to be fully retired at a certain age, start there and work backward. Consider the sale process, your likely post-close involvement, succession needs, and the type of buyer that may ultimately be the right fit. Remember, starting the conversation doesn’t obligate you to sell. It gives you the opportunity to understand your options and put yourself in a position to act when the right window presents itself.
Listen to the full episode of the Transaction Abstract Podcast to hear Joe Hellman and Vermillion Capital’s Mo Gharib discuss transaction timing, succession planning, unsolicited offers, and how business owners can prepare for one of the most important decisions they’ll make.
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