6 Hard Truths About Selling Your Business That No One Tells You

For most business owners, the dream of an exit is a powerful motivator. The idea of one day selling your creation for a life-changing sum is the light at the end of a long, entrepreneurial tunnel. It represents financial freedom, a reward for years of risk, and the final validation of all the hard work.
But the path from running a business to successfully selling it is fraught with personal and financial traps that most founders never see coming. The reality of an exit is often far more complex and emotionally taxing than the dream. Many owners approach the process with critical misconceptions that can dramatically reduce their final payout, or worse, leave them feeling lost and unfulfilled even after the deal is done.

In a recent podcast discussion, financial experts Poonam Mawani and Christian Mather , who specialize in helping recruitment agency owners prepare for an exit, shared some of the most impactful and surprising lessons they’ve learned from the front lines. This article distills their counter-intuitive advice into six hard truths every business owner needs to understand before they even think about selling.

You’re Planning Your Exit at the Worst Possible Time

Most owners only think about selling their business when something goes wrong, not when it’s thriving. This reactive approach is often triggered by burnout, a dispute with a business partner, or a sudden life event. You have no fight left, and the easiest option seems to be to sell up and walk away.
Unfortunately, this is the worst possible time to start the process. Selling under duress puts you in a weak negotiating position, leading to a “distressed sale.” Buyers, particularly in private equity, actively look for these situations because they can acquire a great business at a significant discount. The key takeaway is to be proactive. The best time to start planning your exit is two, three, or even four years in advance, when the business is healthy and growing. Proactive planning also includes putting legal frameworks in place, like a shareholders agreement, to ensure partner disputes don’t force your hand into a sale you’re not ready for.

“The reality is when things are really really good in your recruitment business you know you’re making money the team’s growing the team are happy everything’s good you don’t think about exiting and really the only times you do think about it is when either the relationship with your business partner is starting to crumble or fall apart or um a life-changing event has happened which has meant that you need to now exit or it’s kind of too late…”

Your “Tax-Smart” Lifestyle Business is a Buyer’s Nightmare

Many of the financial practices that are tax-efficient for a “lifestyle business” are major red flags for a potential buyer. As an owner, you might be running your personal car through the business, have non-working family members on the payroll, or claim every possible allowance to minimize your tax burden. While this makes perfect sense for your personal finances, it creates a messy picture for an outsider.
Think of it like selling your house. You wouldn’t invite potential buyers over when there are clothes all over the floor; you’d tidy up first. A buyer wants to see a clean, professional operation with distinct lines between business and personal finances. Every questionable expense translates directly into perceived risk and cost. A buyer will demand a lower price to compensate for the time and money they will have to spend cleaning up the books and mitigating potential liabilities post-acquisition.

That Big Valuation Number is an Illusion

One of the most painful experiences for a seller is watching an exciting initial valuation get progressively “chipped away” during due diligence. A broker might give you an attractive number to get you engaged, but as buyers dig into the details, they find skeletons in the closet.
These issues are often not malicious but are oversights that create real liabilities. Non-compliance with “employment intermediaries reporting” or incorrect handling of taxable benefits (P11Ds) are scary for a buyer. Most valuations operate on a “debt-free cash-free” basis, meaning any business liabilities discovered will be knocked directly off the final price. That invoice discounting facility you use or the payment plan you have with HMRC? Those will be deducted from your payout. After months in the process, the seller feels an “emotional moral obligation to continue” and ends up accepting a final price that is considerably less than they expected.

“…by the time you get 6 months into this process and you’ve gone into the um the due diligence process quite deeply that what you thought you were going to get off the the sale price turns out to be considerably less and you’re kind of like crap I’m 6 months into this now I can’t now back out…”

Forget the Valuation, Calculate Your “Freedom Number”

Many owners become fixated on a psychological number for their business’s worth—”I need to get 5 million”—without any logical basis for it. It’s an ego-driven figure they believe their life’s work is worth, not a strategic one.
A more powerful concept is the “Freedom Number”: the actual amount of money you need to maintain your desired lifestyle after you exit. Financial planner Christian offers a simple formula to calculate a rough estimate of this number:

Your “Freedom Number” Formula: (Annual Lifestyle Costs) x 25 + (One-Off Expenses, e.g., mortgage payoff) = Your Target Exit Fund

Knowing this number grounds the entire exit strategy in reality. It shifts the focus from a vague, aspirational valuation to a concrete financial goal based on your actual needs. You may discover you need far less than you thought, opening up more options and reducing the pressure to hold out for an unrealistic figure.

The Hardest Part Isn’t the Sale—It’s Life After the Sale

Founders consistently underestimate the psychological challenge of life after selling their business. For many, the business isn’t just a job; it’s their “baby.” The process of letting it go can feel like a kind of grief, similar to losing a family member. It’s the source of their daily challenges and a core part of their identity.
When that is suddenly taken away, many experience a “post sale fail.” Christian calls it the “180-day itch,” where after about six months of relief, the owner starts to feel purposeless. Their identity shifts from “I run ABC Recruitment” to just another person at a barbecue struggling to explain what they do. This identity crisis is real and profound. In fact, Christian notes that of the 14 or 15 business owners he has worked with post-exit, all of them have gone on to do something else rather than fully retire.

“don’t underestimate the kind of the mental impact that that has and actually I’ve seen so many times loads of business owners that go to sell and they got the number that they wanted… but they’re they’ve lost their identity…”

Sacrificing Your Life for Tax Efficiency is a Losing Gamble

Common financial advice for owners is to limit their personal income to avoid higher tax brackets, such as the £50k or £100k thresholds. This leads them to live frugally while the business accumulates large cash reserves. While this may seem tax-smart, it comes with an immense and often overlooked opportunity cost.
Every choice to leave that cash in the business is a direct trade-off. Owners make huge personal sacrifices—missing time with their kids, skipping holidays—for money that is still at risk. If the business faces a downturn, that cash reserve can be wiped out just keeping the doors open. The money you could have enjoyed is gone, and the moments you sacrificed are lost forever. The most tax-efficient way isn’t always the best way.

“…the only person that remember all the hours you and that that you that you sort of worked in 20 years are your kids and like if it’s a financial thing that you’re not taking money out because you want to avoid paying 40% tax just live your life now.”

Selling your business is more than a transaction; it’s a fundamental life transition. The journey to a successful exit begins years before you ever speak to a buyer, and it demands that you shift your mindset from that of an operator to that of an owner preparing an asset for its next chapter.

The core message from these experts is clear: preparing for an exit is a holistic process that is as much about personal planning and mental readiness as it is about financial figures. This is not a journey to take alone. The single most important step you can take is to build a championship team for the most important transaction of your life. Surround yourself with a “good locker of advisers”—accountants, financial planners, and mentors who have been through this process before. And don’t be afraid to change your advisors as your needs evolve. They are the ones who will help you avoid the mistakes they’ve seen others make, ensuring that when the time comes, you are not just selling a business, but securing a future you’ve thoughtfully designed.