When You Sell Your Business, What Are You Selling?
- Arnold Shields
- Sep 27, 2013
- 3 min read
Updated: May 29
When someone expresses interest in purchasing your business, they’re not buying bricks and mortar.
They're buying value—and that value falls into one of three categories:
You – Your expertise, relationships and knowledge
Your Customers – Specifically, the cashflow and historical profits they generate
Your Systems – The scalable business model that can operate independently of you
Let’s break these down to see how each impacts your valuation—and what you can do to shift your business into a more lucrative category.
1. You: When the Buyer Wants Your Brain
If your business is driven by your personal skillset, contacts or reputation, then what the buyer is really acquiring is you. This is often the case in consulting, professional services or founder-led operations.
What this means for the deal:
You're likely to stay on under an employment-style contract
There’s usually an earn-out—meaning part of the sale price is paid over time and based on future performance
It’s not a clean exit—you’ll still be working in the business you just sold
The valuation? Lower and based on your continued involvement. If you walk away, much of the value disappears.
2. Your Customers: Buying Reliable Cashflow
If the buyer is looking at your customer base, they are essentially valuing your past income and stability.
This usually applies when:
You have recurring income from long-term contracts or subscriptions
Your clients can be transitioned to a new owner
You’ve built a reputation and market share in a niche sector
Valuation metrics:
Often based on the average profit from the past 2–3 years
Multiples are typically modest (2x–3x EBITDA)
While there’s some upside here, it’s still backward-looking. The focus is on what has been earned, not future scalability.
3. Your Systems: Where the Big Money Is
The most valuable businesses are the ones built on systems.
Why? Because systems are scalable. They’re not dependent on the founder. They can be replicated, integrated into other businesses, or expanded into new markets.
This is why software companies, franchises and online platforms often sell for astronomical sums. The buyer isn’t purchasing historical profit—they’re investing in future growth.
Key features of system-based businesses:
Documented processes
Automation or tech infrastructure
Clear IP or replicable business model
Minimal reliance on any one individual
Valuation is based on: Future earnings potential, not past profits.
What Can You Do Now?
If you're planning to sell your business—whether it's in 6 months or 6 years—start by asking:
Does my business depend on me?
Are my customers loyal to the brand, or to me personally?
Do I have documented systems that someone else could pick up and run with?
Your goal: Build a business that someone else can operate, scale and profit from without you.
That’s where real exit value lies—and at Dolman Bateman, we help business owners develop valuations, strategies and systems to get there.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
