Selling Your Business: Frequently Asked Questions.

Most middle-market businesses sell for a multiple of EBITDA — commonly in the range of 4x–8x depending on industry, size, growth, and quality of earnings; private-equity-sponsored middle-market deals averaged 7.2x adjusted EBITDA in full-year 2025 (per GF Data). A company with $3M in adjusted EBITDA might therefore be worth roughly $12M–$24M, but the spread between an average outcome and a top-quartile outcome is wide — and preparation and strategic value drive much of the difference.

A well-run sale process typically takes 6 to 10 months from engagement to closing — consistent with survey data showing most processes run six to twelve months (IBBA / M&A Source Market Pulse, Q4 2025). In our experience that breaks down as roughly 4–8 weeks of preparation, 2–3 months of marketing and buyer meetings, 4–6 weeks negotiating offers to a signed LOI, and 60–90 days of due diligence and legal documentation. Deals that go longer usually stall in diligence — and the most common causes are fixable before the process starts.

The buyer will almost certainly commission one. A quality of earnings review is an independent accounting analysis performed during due diligence to verify that your reported EBITDA is real, recurring, and correctly adjusted. It is not an audit — it is narrower and more skeptical, focused on whether the earnings the price was based on will continue after closing. That is exactly why sellers should commission their own sell-side QofE before going to market: finding the problems first, on your terms, costs far less than having the buyer find them. A sell-side QofE scoped to the data book typically runs $15K–$30K at our deal sizes, based on current provider quotes; published 2026 benchmarks run roughly $15K–$50K across the lower middle market, rising with company size and complexity.

An earnout is a portion of the purchase price paid later, contingent on the business hitting agreed targets after closing. Earnouts appear in roughly a quarter of private deals overall — and about a third of smaller middle-market transactions (SRS Acquiom 2026 M&A Deal Terms Study and Lower Middle-Market Report) — and can bridge a genuine valuation gap, but they shift risk to the seller, and poorly drafted earnouts are among the most litigated provisions in M&A.

Ask every advisor you interview these questions: Who exactly will run my deal day to day? How many engagements do you take at once? Can I speak to some former clients — including one whose deal didn't close? How many transactions have you closed in my industry and size range in the last three years? How is your fee structured, and what happens if I walk away? What matters is whether the answers, taken together, describe an advisor who will personally own your outcome.

Five things, in priority order: (1) get your financials to a standard that survives a quality of earnings review — reviewed or audited statements, clean add-backs; (2) reduce customer concentration below 20% for any single customer — a rule of thumb from our experience, and published advisory guidance commonly cites 15–25% as the level where buyers begin to discount; (3) build a management layer so the business runs without you; (4) resolve legal loose ends — contracts, IP ownership, employment agreements; (5) understand your own number — what you actually need after tax to fund what comes next.

The working capital peg is the "normal" level of working capital (receivables, inventory, payables) the buyer expects to receive with the business at closing. Deliver less and the price is reduced dollar-for-dollar; deliver more and you may be leaving money in the business for free. It typically gets one sentence in the LOI and causes more late-stage disputes than price does — working-capital purchase-price adjustments are near-universal in private deals (SRS Acquiom M&A Deal Terms Studies), typically set from a trailing-twelve-month average.

Not if the process is run properly. Confidentiality is maintained through blind teaser documents that describe the business without naming it, NDAs before any identifying information is shared, controlled buyer lists, and careful timing of internal disclosure — most employees learn at or just before closing, with key managers sometimes brought in earlier under agreement.