E266: From a $5M Offer to a $70M Deal: The Hidden Secrets of Selling Your Business for Maximum Value - Watch Here

About the Guest:

Todd Sullivan is the co-founder of ExitWise, a platform designed to help business owners maximize the value of their exits by connecting them with the best investment bankers, M&A attorneys, and advisors in their industry. A former entrepreneur with multiple exits—including deals with Microsoft and CBS—Sullivan is on a mission to level the playing field for founders and ensure they don’t leave millions on the table when selling their businesses.

Summary:

In this episode of How2Exit, Ronald Skelton sits down with Todd Sullivan, co-founder of ExitWise, to discuss the realities of selling a business and navigating the mid-market M&A landscape. Sullivan shares his personal journey from professional hockey player to serial entrepreneur with multiple exits, culminating in the creation of ExitWise, a platform designed to help founders secure maximum value for their businesses. The conversation is a deep dive into the hidden pitfalls of unsolicited offers, the importance of industry-specific expertise, and the strategic steps business owners must take to prepare for a successful exit. Sullivan shares eye-opening insights, including a case where a client's offer skyrocketed from $5 million to $70 million—just by understanding how to play the game correctly.

Key Takeaways

1. Unsolicited Offers Are Often Lowball Ploys – Many business owners receive unsolicited offers that seem attractive at first glance but are often far below the company’s true value. Having the right representation can dramatically shift these offers upward.
2. Preparation Is Key – A successful exit doesn’t happen overnight. Business owners should start preparing two to three years in advance, ensuring financials, operational structures, and data rooms are in order.
3. The Right Team Makes All the Difference – Choosing industry-specific investment bankers, M&A attorneys, and advisors can increase deal success rates from under 30% to over 85%. These experts not only help navigate the process but also significantly boost valuation.
4. Understanding Buyer Strategies Is Critical – Buyers are often seasoned dealmakers with playbooks designed to pressure sellers into quick decisions, unrealistic timelines, and one-sided terms. Business owners must learn to control the process and not be rushed into mistakes.
5. Avoid Letting Ego Kill a Deal – Entrepreneurs can sabotage their own exit by overestimating their company’s worth or refusing strong offers based on emotional attachment. An objective valuation and disciplined approach are essential.
6. Earnouts and Employment Agreements Need Careful Structuring – Many entrepreneurs struggle when transitioning to employees post-sale. Structuring earnouts correctly can ensure smoother transitions and maximize financial benefits.
7. The Exit Market Is Shifting – With private equity dry powder moving into lower middle market deals, competition for quality businesses is heating up. Those with strong financials, profitability, and growth potential will command the best multiples.
8. Confidentiality in M&A Is Vital – Overexposing a deal by engaging too many buyers can damage business value and create unnecessary risks. A strategic, private approach to negotiations is far superior.

Article:

How One Founder Turned a $5M Offer into $70M: The Secret Playbook for Business Exits

A business owner receives a life-changing offer: $5 million to sell his company. It’s flattering. It’s exciting. It seems like a golden ticket. But what if that same business is actually worth 14 times more?

That’s exactly what Todd Sullivan, co-founder of ExitWise, uncovered for one of his clients. In this episode of How2Exit, Sullivan sits down with Ronald Skelton to pull back the curtain on the M&A secrets that separate successful sellers from those who leave millions on the table.

The Hidden Danger of Unsolicited Offers

Most business owners aren’t actively looking to sell when an email or call comes in from a larger company expressing interest. “It starts with flattery,” Sullivan explains. “They’ll say they love your business, they see huge potential, and they want to make a deal.”

The problem? These offers are almost always lowball plays. In the case of Sullivan’s client, the initial $5 million offer was just a starting point—a test to see if the owner would bite. By leveraging the right M&A strategies and engaging multiple potential buyers, Sullivan’s team drove the final sale price up to $70 million.

“The biggest mistake owners make is giving away too much information too soon,” says Sullivan. “They start answering questions, providing data—without any protection. The buyer gathers intel, often just to shop the deal elsewhere or use it as leverage for a competitor.”

Why Selling Your Business Is NOT Like Buying One

For many in the How2Exit audience, acquisitions are familiar territory. But Sullivan emphasizes a crucial truth: the way you buy a business is completely different from how you sell one.

“When you’re on the buy-side, you’re looking for leverage,” he explains. “When you’re selling, you need to create competition to drive value. It’s a different game, and many entrepreneurs underestimate that.”

A common misconception? That a business can be sold overnight. In reality, a well-prepared exit takes two to three years of financial and operational cleanup. Sloppy financials, customer concentration issues, or an unclear growth trajectory can all tank a deal—or slash its valuation.

The Right Team Can Add 30% (or More) to Your Valuation

One of the biggest takeaways from this episode is the power of industry-specific expertise in M&A. Sullivan shares a shocking statistic:

• Success rates for generalist investment bankers: Under 30%
• Success rates for industry-specific investment bankers: 85%+

The difference? Industry experts know the buyers, understand valuation models, and have inside connections that allow them to run tightly controlled, high-value sale processes.

“We had a client selling a pet-tech company,” Sullivan recalls. “We found an investment banker who had just completed a deal with the biggest strategic acquirer in that space. The banker knew exactly who to call—within minutes, we had a premium offer on the table.”

Don’t Let Ego Kill Your Deal

A sobering lesson from this conversation is that many deals die because of the seller’s own mindset.

Sullivan recounts a founder who received a $90 million offer on a business initially valued at $60 million. Despite the windfall, she turned it down, convinced that her company had grown enough during the sale process to justify $100 million. The buyer walked. The deal collapsed.

“Great exits happen with great businesses that are still growing,” says Sullivan. “If you’re hoping to max out valuation, you need to keep scaling while selling—and know when to say yes.”

A New Reality for Business Sellers

With private equity sitting on over $4 trillion in dry powder, competition for quality businesses is fierce. This means valuations are strong, but it also means buyers are savvier than ever.

They have teams of M&A professionals whose sole job is to get the best deal possible—for them. If you don’t have experienced representation on your side, you’re bringing a butter knife to a gunfight.

Final Thoughts

If you’re a business owner thinking about selling in the next 2-3 years, this episode is a must-listen. Whether you’re receiving inbound offers or just beginning to consider your exit options, Sullivan makes one thing clear:

“You don’t exit the same way you bought.”

And if you do, you’ll likely be leaving millions on the table.

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