Why I Left M&A: The Heartbreak of the Unprepared Exit
Written by Nicole Newman, MBA, CEPA
I remember sitting across the table from a business owner—let’s call him Jim. Jim had spent thirty years building a manufacturing company. He missed soccer games, worked weekends, and poured every ounce of his energy into the business. He was finally ready to sell, and he had a number in his head that would fund a comfortable retirement for him and his wife.
As a buy-side M&A professional at the time, my job was to evaluate the deal for the corporation I represented. I had to deliver the news: the market value of his business was about half of what he expected.
The initial reaction was always the same: panic, followed by either defensiveness or a complete shutdown.
I saw that look on Jim’s face too many times. Sometimes it was denial, but often it wasn’t just disappointment; it was devastation. It was the realization that the last decade of “grinding” hadn’t built the security he thought it had.
That is exactly why I changed my career. I moved from the transactional world of M&A to investment advising because I was tired of watching good people lose millions at the finish line. I wanted to help owners before they got to the negotiation table, while there was still time to fix the cracks in the foundation.
If you own a business, I want to share the hard truths I learned on the other side of the table so you don’t end up like Jim.
The Illusion of Control
The biggest lie business owners tell themselves is, “I’ll sell when I’m ready.”
It sounds logical. It’s your business, so you should pick the exit date, right? But after years of negotiating deals, I can tell you that the market rarely cooperates with your personal timeline.
There are two massive forces that owners often ignore until it’s too late:
1. The Market Doesn’t Care About Your Timeline
When I was representing private equity groups, we looked for businesses when market conditions were right for us, not the seller. Valuation is driven by supply and demand. If your industry is hot and capital is cheap, your business might be worth 8x earnings. If the economy cools down or interest rates spike, that same business might only be worth 4x.
I’ve seen owners wait for the “perfect time” to sell, only to miss a market window and watch their valuation plummet through no fault of their own. You cannot control the market, but you can control your readiness. If your business is always “deal-ready,” you can capture the high tide when it comes.
2. Life Happens (The “5 Ds”)
Statistically, half of all exits aren’t planned. They are forced by the “5 Ds”: Death, Disability, Divorce, Disagreement among partners, or Distress.
When you are forced to sell because of a health crisis or a partner dispute, you have zero leverage. Buyers can smell distress from a mile away. They will discount your price, and you will have to take it. The only insurance against this is planning your exit years before you think you need to.
The "Piggy Bank" Problem
Here’s a tricky and all too common mistake I see: business owners using their company solely as a means to fund their lifestyle, without building any significant wealth outside of it. The business pays for everything—vacations, cars, family expenses. This feels sustainable while you’re at the helm, but what happens after you sell?
If you haven’t saved or invested beyond your business, selling can create an uncomfortable financial gap. The proceeds from the sale might seem substantial, but when your sense of security and daily comforts were always covered by the company, it’s easy to overestimate what a payout will support. Without separate investments or a clear plan, you may discover too late that you simply can’t afford to exit or will have to make unwanted sacrifices to your lifestyle. The bottom line: treating your business like a personal ATM, without thinking about life after the sale, can leave you with fewer choices and less freedom at a time when you hoped to enjoy both.
While buyers will adjust (or “normalize”) the financials to reflect true earnings, the biggest risk is personal. If you’ve tied your standard of living entirely to perks and income from the business and haven’t taken steps to generate wealth elsewhere, you may be in for a rude awakening. I’ve seen owners realize too late that, after the sale, their after-tax proceeds and investment income just don’t stretch far enough to support the lifestyle they’re used to—especially if their valuation expectations weren’t grounded in reality.
You have to know what it costs to live your life and plan for how to support that lifestyle independent of your business. A realistic valuation, thoughtful wealth-building outside your company, and frank conversations about post-exit expenses are the best antidotes to this problem. Without those, you may discover you simply can’t afford to exit when the time comes.
The Uncle Sam Surprise
Let’s assume you sell the business for the price you want. The next hurdle is keeping that money.
It is shocking how many entrepreneurs reach the closing table without a tax strategy. They look at the gross sale price and mentally spend that money. Then they get hit with capital gains tax, state taxes, and potential estate taxes.
I’ve seen owners hand over 30% to 40% of their life’s work to the government simply because they didn’t plan ahead.
This isn’t just about income tax; it’s about estate planning. If your wealth is tied up in an illiquid business, what happens if you pass away before selling? Do your heirs have the cash to pay the estate taxes, or will they be forced to fire-sale the company just to pay the IRS?
These aren’t fun topics, but ignoring them is negligent to your family and your legacy.
How to Rewrite Your Ending
I didn’t share these stories to scare you. I shared them because I’m passionate about helping you avoid them. You can have a successful, lucrative exit, but you have to stop acting like an owner and start thinking like an investor.
Here is how you start:
Know Your "Walk Away" Number (or "Reservation Number"): Work with a financial planner to determine exactly how much net cash you need to support your lifestyle post-exit. Do this math outside of the business.
Get a Real Valuation: Stop guessing. Hire a professional to value your business today. If there is a gap between what it’s worth and what you need, you have time to close it.
Clean Up the Books: Stop using the business as a personal piggy bank. Show healthy, clean profits. It builds trust with buyers and may increase your multiple.
Make Yourself Redundant: If you got hit by a bus tomorrow, would the business survive? If the answer is no, you don’t have a sellable asset; you have a job. Build a team that can run without you.
The Bottom Line
Selling your business is a major milestone—one that reflects years of hard work, resilience, and dedication. Think of it like the final exam at the end of a long course. It’s not about passing or failing, but about giving yourself the chance to showcase what you’ve built and to write the next chapter with confidence. With thoughtful planning and a clear strategy, you can step away knowing you’ve honored your efforts and set yourself up for the future you deserve.
Take the first steps now. Your future self will thank you.