5 Common Misconceptions That Could Undermine Your Business Sale
As a Tennessee business broker, I spend a lot of time helping owners prepare for one of the biggest financial decisions of their lives: selling their business.
I work with a wide range of owners — from restaurants and roofing companies to distribution and manufacturing businesses — helping them plan profitable exits.
Unfortunately, many enter the process with inaccurate assumptions about value, timing, and taxes — and those misconceptions can cost them time, money, and momentum.
A good video to go along with this post is my video on the top three ways I help owners as a business broker:
Here are 5 of the most common myths I see — and what’s actually true:
1. “A buyer will pay for what they could do with the business.”
It’s tempting to believe your business’s future potential justifies a higher price. But buyers don’t pay based on what they might do with it — they pay based on how the business is performing right now.
Buyers want reliable, proven cash flow, systems that work without you, and clean financials. If expansion plans or franchising opportunities aren’t already in motion, they don’t count toward valuation.
Whether you’re selling a restaurant, a roofing business, a manufacturing company, or a distribution business, future opportunity won’t outweigh current performance. Every industry has its own dynamics — but cash flow always leads.
2. Inventory + goodwill = asking price
This is a common pricing mistake. Sellers often add inventory value plus goodwill and assume that equals a fair price.
But here’s the reality:
- Inventory is typically included in the price, but only at cost, and only as it supports current operations.
- Goodwill is subjective — it must be backed by consistent, transferable profits that can survive after the owner exits.
- Buyers look at earnings, risk, and transferability. If your profits don’t justify the asking price, no amount of goodwill will make up the gap.
Whether you’re pricing a restaurant, a roofing contractor, a manufacturing firm, or a distribution company, the numbers must justify the valuation — not just the assets or reputation.
3. “My business will sell quickly.”
Most small business sales take 6 to 12 months — and that’s assuming you’re prepared. The sale process involves:
- Accurate financials
- Professional packaging and buyer materials
- Buyer vetting
- Negotiation and deal structure
- Due diligence and third-party financing
- Whether you’re selling a restaurant, a roofing business, a manufacturing company, or a distribution business, every industry has its own quirks and timeline factors — but none of them are instant.
If you’re close to burnout, waiting to start the process until you’re “done” could backfire. Preparation pays off — no matter the business type.
4. “The multiple is 7x or greater.”
You may hear about SaaS companies or venture-backed firms selling for 7x or 10x earnings — but that’s not the norm for main street businesses.
Most small businesses sell for a multiple of 2.5x–4x Seller’s Discretionary Earnings (SDE).
To get higher multiples, you need:
- Scalable systems and infrastructure
- Recurring revenue, which as a roofing business broker I often see as challenging because of the lifecycle of roofs
- Low owner dependency, which i often see as challenging as a manufacturing and logistics business broker because of the amount of involvement of owners in local small manufacturing and logistics.
- Clean financials
Unless you’ve built a true platform business, you’re likely looking at a much more grounded — but still valuable — multiple.
Whether you’re working with a restaurant business broker, a roofing business broker, or someone experienced in manufacturing and distribution, the process still requires preparation, clean books, and realistic expectations — no matter your industry.
5. “I’ll pay so much in capital gains, it’s not worth selling.”
Taxes are real — but they aren’t always a dealbreaker.
There are ways to structure deals to minimize capital gains exposure through:
- Advanced preparation with an M&A expert
- Installment payments
- Allocation of purchase price
- Strategic use of retirement accounts
With the right advisors, many owners end up with a far better after-tax outcome than they expected — especially compared to continuing to run the business indefinitely.
Whether you’re exiting a restaurant, a roofing business, a manufacturing company, or a distribution business, tax planning is key to maximizing your net proceeds and protecting your legacy.
Wrapping It Up: Why Realistic Expectations Drive Better Exits
These misconceptions aren’t just harmless misunderstandings — they can lead to overpricing, poor buyer fit, stalled deals, and long delays.
If your business has real cash flow, loyal customers, and operational strength, it can be sold — but the process demands a clear view of value, time, and risk.
Whether you’re ready to sell or still preparing your business for the market, I help restaurant owners, roofers, manufacturers, and distributors build a plan. As a Tennessee business broker with deep experience as a restaurant, roofing, manufacturing, and distribution business broker, I can guide you through the process — or help you find a GM so you can step back.