How to prepare, negotiate and close the sale of your company, and keep more of the value you built.
Most owners sell a business once. The buyer, whether a strategic acquirer or a private equity fund, typically completes several transactions a year. This playbook is intended to narrow that gap. It is written as a working document: read it in order, score yourself, then use the worksheets on your own numbers.
The agreed price and the cash you receive are different numbers. Between them sit the debt bridge, the working capital target, the earn-out, the retention and the warranty caps. Sellers who understand these mechanisms before negotiations begin keep materially more of the value.
Please read the Important Notice on page 3 before using this playbook. It is general information only and not advice.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookThe rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookFor most owners, selling the company is the largest financial transaction of their career, negotiated against a buyer with far more practice. Value is rarely lost in the headline price. It is lost in the detail that follows.
1. Arriving unprepared. A buyer’s first question is whether your earnings are real and repeatable. If the answer depends on you personally, on two customers, or on accounts that need explaining, the buyer prices that uncertainty, usually through a lower multiple or a larger share of the price deferred into an earn-out.
2. Negotiating the number and not the structure. Sellers tend to negotiate hard on enterprise value and then accept the buyer’s first draft on everything else. Yet the definition of net debt, the working capital target and the earn-out metric can each move the cash outcome by more than a full turn of EBITDA. Chapter 2 shows how.
3. Losing leverage after the letter of intent. Once you grant exclusivity, competitive tension disappears. Every issue found in due diligence becomes a reason to revisit the price, and the seller, tired and committed, often concedes. Chapters 4 and 5 deal with this re-trade risk directly.
Recent market data shows a gradual tilt towards buyers on several points that matter to sellers: more earn-outs, warranty claim periods longer than 24 months in nearly a third of deals, and fewer low liability caps. A rising share of financial sponsors on the buy side is one driver. Sellers who know what is market can resist off-market requests with evidence rather than emotion.
The supply of companies for sale is rising across Europe as a generation of owners approaches retirement; in June 2026 the European Commission issued new guidance to make SME ownership transfers easier, updating its recommendation from 1994. More sellers in the market makes preparation more valuable, not less. Each of the three sources of value loss can be prevented, and most of the work happens before a buyer is contacted. Chapter 1 starts there.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookTwelve statements across four dimensions. Score each one: 0 if it is not true today, 1 if it is partly true, 2 if you could prove it to a buyer tomorrow. Be strict. A buyer’s due diligence team will be.
Add the four dimension subtotals to get your total, out of 24.
Want to know what to fix first? The full eBook shows what to do for each dimension.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookMuch of the value in a sale is secured before anyone outside the company knows about it. Twelve to twenty-four months of preparation is normal; six is the practical minimum.
A sale is a means to an end, not the end itself. Before you think about price, write down your answers to four questions. They decide what kind of buyer and structure suit you.
Private equity buyers often want you to roll over 10–30% of your proceeds into the new structure. That can be very valuable, or a trap (Chapter 2).
Your willingness to stay determines how much of the price can be deferred or tied to an earn-out.
Brand, location, employees, the family name. Decide which you will trade for money and which you will not.
Net of tax, debt, costs and deferred amounts. This is the beginning of your walk-away position.
Negotiation literature calls the most important reference point in any deal your BATNA: the best alternative to a negotiated agreement. It is not a bottom-line price picked in the abstract; it is what you will actually do if this deal does not happen. Every offer should be judged against it. The stronger and more credible your alternative, the more easily you can walk away and the better the terms you can hold out for.
For an owner, a realistic alternative is usually one of: continue to run and grow the business; sell a minority stake; hand over to management or family; or run the process again later with a better story. Write down the one you would really pursue, with numbers. Then estimate the buyer’s alternative as well: what happens to them if they do not buy you?
If you would accept almost any offer because you are tired, ill, over-leveraged or in dispute with a co-owner, your walk-away position is weak, and an experienced buyer will sense it. Fix the underlying problem, or keep it strictly confidential and let a competitive process create the alternatives for you.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookAn offer of €24m is the start of a calculation. What you receive depends on how the buyer bridges from enterprise value to equity value, and how much of that equity value is paid at completion.
Most offers are made on a cash-free, debt-free basis, assuming a normal level of working capital. The buyer values the operating business, then deducts debt, adds cash and adjusts for any shortfall or excess in working capital against an agreed target. Every one of those definitions is negotiable.
| Lindenhof Group · From offer to cash | €m |
|---|---|
| Headline enterprise value (6.0× €4.0m EBITDA) | 24.0 |
| Less net financial debt (bank loans minus cash) | −3.2 |
| Less debt-like items (accrued bonuses, unpaid tax, deferred income, pension deficit) | −0.9 |
| Less working capital shortfall against the buyer’s proposed target | −0.6 |
| Equity value | 19.3 |
| Less earn-out (contingent, paid over two years) | −3.0 |
| Less retention held against warranty claims | −1.0 |
| Less transaction costs (advisers, legal, vendor due diligence) | −0.7 |
| Cash received at completion, before personal tax | 14.6 |
Hypothetical. The earn-out and retention may still be paid later, but they are at risk and their timing is not in your control.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookThe strongest negotiating position a seller can have is a credible second buyer. A well-run process is designed to create that alternative.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookThe letter of intent (LOI) or term sheet is mostly non-binding, which leads sellers to treat it lightly. That is a mistake. It is the last document you sign while you still have competitive leverage.
Watch for these phrases in a draft LOI. Each looks harmless, but leaves a key term open until after you are exclusive.
Replace each with a number, a method or a named document before you sign.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookConfirmatory due diligence is where most price reductions happen. Some are justified. Many are a negotiating tactic that relies on the seller being exclusive, tired and committed.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookThe share purchase agreement (SPA) decides how much of the price you keep. Its key provisions fall into two groups: how the final price is fixed, and how risk is allocated after completion.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookBetween signing and completion the business must be run carefully, and after completion several mechanisms still decide how much you receive.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookProfessional buyers negotiate every week. Sellers do not need to match that experience, but they should know the principles buyers use and the tactics they rely on.
The rest of this chapter, plus the checklists and worksheets, is in the full eBook.
Get the free eBookThe rest of the chapters, plus the checklists and worksheets, is in the full eBook.
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