A client turned down my advisory offer last month. His reason? He didn’t need an advisor. Selling a company, he said, is just like selling a flat – put it out there, collect offers, pick the best one. He was wrong. And that belief is more common than most people think.
The Comparison That Costs Millions
I understand where it comes from. Both involve a seller, a buyer, and a price. Both end with a signed agreement and a transfer of ownership. On the surface, the logic holds.
But that’s where the similarity ends.
When you sell a property, the buyer sees exactly what they’re buying. The price is benchmarkable in an afternoon – comparable transactions are public, the square footage is measurable, the location is what it is. The whole thing can close in weeks.
When you sell a business, the buyer spends months trying to understand what they’re actually acquiring. They dig into your financials, your contracts, your customer concentration, your key-man risk, your IT systems, your HR structure. Every answer you give them – or fail to give them – affects either the price or the terms of the SPA.
That’s a fundamentally different game.
What Due Diligence Actually Reveals
In real estate, due diligence is mostly a legal formality. Land registry check, building permits, maybe a structural survey.
In M&A, due diligence is where deals are won or lost.
A buyer’s financial advisors will reconstruct your EBITDA from scratch. They’ll question your add-backs. They’ll flag revenue that’s concentrated in one client. They’ll notice that your top salesperson has no non-compete agreement. They’ll find the lease that expires in 14 months with no renewal clause.
None of this kills a deal automatically. But each finding becomes a negotiating point. And without someone on your side who’s seen this process dozens of times, you won’t know which points to defend, which to concede, and which are genuine red flags you should have fixed before going to market.
The Price Is Not the Price
In real estate, the offer you receive is pretty much what you get. Maybe you negotiate a few percent. The final number is close to the headline.
In business sales, the headline number and the actual consideration you walk away with can be very different things.
Earn-out provisions can defer a significant portion of the price – contingent on hitting targets you may or may not control after you’ve handed over the keys. Working capital adjustments can reduce the equity consideration at closing by hundreds of thousands. Representations and warranties can come back to haunt you 18 months later.
I’ve seen transactions where a seller agreed to a headline price they were happy with, signed an SPA they didn’t fully understand, and ended up with materially less than they expected – not because anyone cheated them, but because the mechanics of the deal were not what they thought.
What This Means in Practice
I’m not saying you can’t sell a business without an advisor. You can.
But you need to know what you’re walking into.
The buyer – whether it’s a strategic acquirer or a PE fund – will have an experienced deal team. Financial advisors, lawyers, tax specialists. People who do this every week. Their job is to structure the transaction in a way that’s optimal for the buyer.
If you’re on the other side of that table representing yourself, you’re not in a flat sale. You’re in a negotiation where the other party has done this a hundred times and you’ve done it once.
That asymmetry matters.
The Question Worth Asking
My client from the opening of this post may end up doing fine. Maybe he’ll find a buyer, agree a fair price, and close without too many surprises.
Or maybe he’ll realize six months in that the process is nothing like he imagined. That the data room alone took three weeks to organize. That the buyer’s due diligence raised questions he didn’t have answers to. That the LOI he signed had provisions he hadn’t noticed.
I hope it works out for him. I genuinely do.
But I keep thinking about what he said. “It’s just like selling a flat.”
It isn’t. And the sooner business owners understand that, the better prepared they’ll be – whether they work with an advisor or not.
Key Takeaways
- Due diligence in M&A is nothing like a property survey – it’s months of forensic scrutiny across financials, legal, operations and HR.
- The headline price in a business sale is not what you necessarily receive – earn-outs, adjustments and warranty claims can all reduce the final consideration.
- The buyer’s deal team does this every week. Entering the process without comparable experience is a structural disadvantage.