Frequently Asked Questions
Common questions about selling a business, valuation, deal structure, and working with Neo Advisory. Answers are kept short and direct; where a topic needs more depth, we link to the relevant research.
Selling a Business
How long does the entire sale process take?
A well-run transaction typically takes 6–9 months from engagement to closing. This includes 3–5 weeks for preparation and marketing materials, 4 weeks for buyer outreach and indications of interest, 1–2 weeks for management presentations, 6–10 weeks for due diligence, and 2–4 weeks for final negotiations and closing. Transaction complexity, buyer type, and market conditions can all affect this timeline.
Will my employees, customers, or competitors find out about the sale?
Confidentiality is the highest priority. We operate under strict NDAs and control the flow of information at every stage. Buyers receive only a blind teaser profile initially, and no identifying information is shared until they execute a confidentiality agreement. Most employees and customers never learn of a potential sale until just before or after closing.
How are advisory fees structured?
We charge a success fee based on a percentage of the transaction value, typically with a minimum fee. The structure aligns our incentives directly with yours — we are paid when you achieve an outcome, not for activity. Specific terms are discussed during an initial, no-obligation consultation.
Can I stay involved in the business after selling?
Yes, and many transactions are structured that way. Private equity buyers frequently want sellers to retain a minority stake and continue in a leadership role. Strategic buyers may offer consulting agreements or employment contracts. Your desired post-sale involvement is a key factor in how the business is positioned and how offers are evaluated.
How do I prepare my business for sale?
Preparation should ideally begin 12–24 months before going to market. The highest-value steps are cleaning up financial statements, documenting key processes, reducing customer concentration, strengthening the management team, and resolving any legal or compliance issues. Almost none of this can be done during a live process, which is why starting early is the single largest lever on the final number.
I am not ready to sell yet. Is it too early to talk?
No — earlier is generally more useful. The work that raises a valuation takes 12–24 months, so a conversation two or three years out is worth more than one three months out. An early discussion is usually about readiness rather than process: what would need to change before going to market, and in what order. It carries no obligation and does not start a clock.
What if my financial statements are not clean?
This is the norm rather than the exception in founder-led businesses, and it is a fixable problem when there is time. Most issues are personal expenses run through the business, inconsistent revenue recognition, or reporting that has never been reconciled to tax returns. Identified early, these become documented add-backs that support the valuation. Discovered by a buyer during due diligence, the same items reduce the price or break the deal.
Can I sell my business without an advisor?
You can, and some owners do — most often when they already have a specific buyer. The trade-off is that a single buyer with no competing bid sets the terms, and the seller runs the process while also running the business. An advised process creates competition, keeps the owner focused on operations through a period when performance is being scrutinized, and puts a buffer between the seller and the buyer during negotiation.
Valuation
How is my business valued?
Businesses in the lower middle market are typically valued on a multiple of Adjusted EBITDA — earnings before interest, taxes, depreciation and amortization. The multiple depends on scale, growth, customer concentration, recurring revenue, management depth, and current market conditions. We benchmark against recent comparable transactions in your sector to produce a valuation range rather than a single figure.
What is EBITDA and why does it matter in M&A?
EBITDA is the primary measure of operating profitability used in middle-market M&A. Buyers and their lenders use it to assess how much debt a business can service and what multiple they can justify paying. Adjusted EBITDA adds back non-recurring and owner-specific expenses to reflect the earning power of the business under new ownership, and it is the number a transaction is actually priced on.
What are add-backs, and which ones will a buyer accept?
Add-backs are adjustments that restate reported earnings to what the business would earn under a new owner — owner compensation above market, personal expenses, one-time legal or professional costs, and genuinely non-recurring items. Buyers accept add-backs that are documented, verifiable, and clearly non-recurring. They resist anything that looks like a normal cost of operating, and an aggressive add-back schedule that does not survive scrutiny damages credibility across the whole process.
What multiple will my business sell for?
It depends heavily on sector and on how far the business sits from being institutionally investable. Across the four sectors we research, the premium a consolidated platform commands over a single asset ranges from roughly two turns of EBITDA to eight. Our published sector reports set out current ranges and the factors driving them for car wash, collision repair, gas and convenience, and residential home services.
What is a Quality of Earnings report, and do I need one?
A Quality of Earnings report is an independent accounting analysis testing whether reported earnings are sustainable and accurately stated. Buyers commission one during due diligence as a matter of course. Increasingly, sellers commission their own beforehand — a sell-side QoE surfaces issues while they can still be addressed, gives buyers confidence in the numbers, and reduces the risk of a price reduction late in the process.
What makes a business attractive to buyers?
Defensible earnings, a diversified customer base, a management team that operates without the owner, documented processes, and credible growth potential. Recurring revenue and low customer concentration drive premium valuations. The single most common value detractor in founder-led businesses is owner dependence: a business that cannot run for a month without its founder is priced as a job rather than an asset.
Process & Deal Structure
What is the difference between a strategic buyer and a financial buyer?
Strategic buyers are operating companies in the same or a related industry, acquiring to grow. They often pay premium valuations because of synergies they can realize. Financial buyers — primarily private equity — acquire businesses as standalone platforms or as add-ons to one they already own, focusing on growth potential and typically retaining existing management. Each suits different seller objectives, particularly around post-sale involvement.
What is an LOI and is it binding?
A Letter of Intent sets out the proposed terms of a transaction — price, structure, and key conditions. Most provisions are non-binding and either party can walk away during due diligence. Certain provisions are binding, typically exclusivity or no-shop clauses, confidentiality, and expense allocation. Because exclusivity removes your competitive leverage for the period it runs, LOI terms matter more than their non-binding status suggests.
What happens after we sign an LOI?
Due diligence begins, usually running 6–10 weeks, alongside negotiation of the definitive purchase agreement. The buyer verifies financial, legal, operational, HR and customer information through a data room, and typically commissions a Quality of Earnings report. Final negotiations cover working capital, escrow and indemnification, and any items diligence has surfaced. Most of the value protected or lost after an LOI is decided in this phase, not in the headline price.
What is due diligence, and how disruptive is it?
Due diligence is the buyer's comprehensive review of the business — financial, legal, operational, HR and customer. It is managed through a structured virtual data room, with the advisor acting as a buffer between the seller and buyers to limit disruption to daily operations. Preparation before going to market is what determines how disruptive this phase turns out to be.
What is a working capital peg, and why does it matter?
A working capital peg is the level of working capital the buyer expects to be left in the business at closing, usually set from a trailing average. If actual working capital at closing falls below the peg, the purchase price is reduced pound for pound. It is one of the most common places value quietly leaks out of a deal after the headline price is agreed, because it is negotiated late and often with less attention than it deserves.
What is an earn-out, and should I accept one?
An earn-out makes part of the purchase price contingent on the business hitting agreed targets after closing. It can bridge a genuine gap in expectations between buyer and seller. The risk is that you no longer control the business being measured, so the terms matter enormously: what is measured, who calculates it, over what period, and what happens if the buyer changes how the business operates. Treat any earn-out as money you may not receive.
Buying a Business
How do I access your deal flow?
Email info@neoadvisory.ai with your acquisition criteria — sector, size, geography, and deal type. Every submission is reviewed, and buyers whose thesis matches receive pre-qualified opportunities, including off-market situations before they reach the broader market.
What types of businesses do you represent?
Founder-led businesses in the automotive aftermarket, professional services, and business services sectors, with revenues between $3M and $50M. Most are owner-operated, profitable, and coming to market for the first time — which typically means less prepared and less picked-over than assets that have already run a broad process.
Is there a fee for buyers?
No. Buyers are never charged a fee. Advisory fees are paid by sellers, which is the standard structure in lower-middle-market M&A and keeps the duty to the seller unambiguous.
How quickly can a deal close once we identify an opportunity?
A typical process runs 3–6 months from initial introductions through closing, including due diligence and documentation. Complexity, financing, and buyer readiness are the main variables — a buyer with committed capital and a clear thesis moves considerably faster than one still assembling either.
What is your typical deal size range?
The lower middle market, with deal sizes typically ranging from $5M to $50M in enterprise value. We selectively work on transactions outside this range where there is a strategic rationale or an established buyer relationship.
How are opportunities screened before being presented to buyers?
Every opportunity is pre-qualified before presentation. We assess seller motivation, business quality, financial stability, and transaction viability. Buyers receive only situations that meet their stated criteria and represent genuine opportunities — not every listing that reaches the market.
Can I use SBA financing to acquire a business?
For smaller acquisitions, often yes. SBA 7(a) loans are commonly used for lower-middle-market business purchases and can fund a substantial share of the price, though they carry personal guarantee requirements and a longer approval timeline than conventional financing. Sellers weigh SBA-financed offers against the certainty and speed of a cash or conventionally financed buyer, so financing structure affects competitiveness as well as feasibility.
Still have a question?
Email info@neoadvisory.ai. Initial conversations are confidential and carry no obligation.
For sector-specific valuation ranges, see our industry research. For a structured review of how ready a business is for a transition, see the business readiness assessment.