Bradley HamnerFounder, BlueprintOS · Founder - Above the Business & BlueprintOS

The Hidden Pitfalls of Selling Your Business with Darryl Bates-Brownsword

Name: The Hidden Pitfalls of Selling Your Business with Darryl Bates-Brownsword
Uploaded: 2024-10-24T04:00:06+00:00
Duration: 57 s
Channel: Bradley Hamner
Description: In this segment, Darryl Bates‑Brownsword explains why business owners who are not "exit‑ready" often encounter serious problems after selling. He…

24 Oct 2024 · 1 min

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In this segment, Darryl Bates‑Brownsword explains why business owners who are not "exit‑ready" often encounter serious problems after selling. He describes how buyers frequently require the seller to stay on for a few years under an earn‑out arrangement to maintain growth, but once ownership transfers the seller loses control. The new owners may then shift the goalposts—changing expectations and integration requirements—making it difficult for the former owner to meet the earn‑out targets and preserve the business’s trajectory. This pattern repeats across many transactions, highlighting the hidden risks of selling without proper preparation.

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because they weren't exit ready, they hadn't specifically been working in their business, what they would end up doing is they'd get an offer and the buyer would say, well, look, I love your business, but for me to take it over, for trajectory of growth that you're on, for that to continue under my ownership or the new ownership, I just need you to hang around for a couple more years to keep things growing. You know, they'd negotiate and discuss some sort of earn-out arrangement and the buyer would go, yeah, well, no worries, I can do that. I think I can work with this new owner for a couple of years and I can achieve the numbers that forecast and I can get all my valuation. And there was a common thread, a common pattern that I saw what was happening time and time again with these guys is that once they no longer owned the business, they no longer had control. A couple of things would happen. And one of them is the goalposts were shifted on them because the new owners had to do whatever they had to do to include and incorporate the business into their structure and get the leverage that they were looking for.