Buying or Selling a Business
Buying or Selling a Business? Start With These Questions
Every week I get the same handful of questions from buyers and sellers across the country. And nearly all of them trace back to three ideas I’ve built my career on: passion, timing, and cash flow. Here are the questions—and the straight answers I give.
What's the most important thing to look at when buying a business?
Cash flow. Not revenue, not the brand, not the building—cash flow. You are not buying what the business sells. You’re buying what it keeps after every real bill is paid.
A business doing two million in sales that keeps fifty thousand is a job with extra steps. One doing eight hundred thousand that keeps three hundred thousand is a machine. Learn to find the real number underneath the top-line noise, and you’ll already be ahead of most buyers out there.
When is the best time to sell my business?
When you’re doing well—and that’s the answer nobody wants. The instinct is to sell when you’re tired or the business is slipping. But that’s exactly when buyers run, and your price collapses.
Buyers pay for the future, not the past. A growing business tells a story a buyer wants to finish, and they’ll compete to pay a premium for it. Sell on the way up, while the story is still being written, not on the way down while you’re explaining what went wrong.
The best time to sell is when you don’t have to.
Does passion really matter, or is that just motivational talk?
It matters more than almost anything, and it’s the opposite of soft. Owning a business is hard. On the brutal days, money won’t get you out of bed—only caring about what you’re building will.
Where there’s no passion, there’s no profit, because passion is what gets you through the years while the profit is still being built. Just remember the other half: passion without discipline is a hobby. You need both.
With these in place, you’ve created a structured path: make the offer, verify everything, and only commit fully once the business proves it is what it claimed to be. We map the verification work in the due diligence checklist.
Why do you say cash flow three times?
Because it’s the first, second, and third most important thing in any deal. When you buy, you’re buying cash flow. When you own, cash flow is your oxygen—plenty of “profitable” businesses die because they run out of cash at the wrong moment. When you sell, your price is a multiple of cash flow.
Three stages, one number. Say it three times and it finally sticks.
My business is profitable on paper but money's always tight. Why?
Because profit is an opinion and cash is a fact. You can show a profit and still miss payroll if your money is trapped in inventory or unpaid invoices. Profit tells you whether the business makes sense over time. Cash flow tells you whether you can pay your people on Friday.
Manage the timing of money—collect fast, pay smart, keep reserves—and the tightness eases. Ignore it, and profitability won’t save you.
How do I get the highest price when I sell?
Make your cash flow strong, clean, and provable, and sell while it’s growing. Buyers and banks don’t pay for cash you can’t document. They pay a multiple of the cash flow they can verify in your financials, tax returns, and bank statements.
Start running the business with the exit in mind years before you sell. Clean books, documented systems, and reduced owner dependence turn into real dollars at the closing table.
What if I'm not ready to sell yet?
Then at least know your number. The owners who get blindsided are the ones who never valued their business until they were forced to sell—by death, divorce, disability, or a partner disagreement. Each of those forces a sale on someone else’s timeline, and a forced sale is a discounted sale.
Knowing what your business is worth today, while you’re thriving, is how you stay in control of the one decision that matters most.
The Bottom Line
Most questions about buying, owning, and selling a business come down to three answers: build it with passion, run it on cash flow, and sell it when you’re winning. Get those right and the rest tends to follow.
Have a question I didn’t cover here? That’s what we do all day at Peterson Acquisitions. Reach out and let’s get you a straight answer.
Frequently Asked Questions
Mostly no. An LOI is largely a non-binding framework that outlines proposed terms before the definitive purchase agreement. Typically only a few provisions are binding — most commonly confidentiality and, when included, an exclusivity period. The binding commitment to buy comes later, in the purchase agreement, and remains subject to your contingencies.
An LOI is largely non-binding and sets the stage for negotiation, while an Offer to Purchase is a more complete, actionable document that moves the deal forward more decisively. A well-built Offer to Purchase keeps every buyer protection intact through the same contingencies, so being more decisive doesn’t mean being less protected.
At minimum: satisfactory due diligence, financing approval, clean and transferable documentation, lease assignment if location matters, and an acceptable final purchase agreement. These contingencies are your most important protection — they let you renegotiate or walk away without penalty if what you verify doesn’t match what you were told.
Most small-business acquisitions are structured as asset sales, where you buy specific assets and generally avoid inheriting the seller’s past liabilities. Stock sales transfer the entire entity, including liabilities, and are often preferred by sellers for tax reasons. The right structure depends on tax and liability factors, so your attorney and accountant should advise on it.
Ready to Buy the Right Business?
Making an offer is where preparation meets opportunity. Work with Peterson Acquisitions to structure an offer that moves the deal forward while protecting everything that matters — and review the complete process in how to buy a business.
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