How to Reduce Friction When Selling a Business
- Dr Allen Nazeri DDS MBA
- May 4
- 5 min read
Selling a business is one of the most important financial and emotional decisions an entrepreneur can make. Whether the sale involves a full exit or a majority recapitalization, the process can either be smooth and rewarding—or riddled with delays, missed opportunities, and deal fatigue. In this article, we’ll explore the key strategies to reduce friction when selling a business, so you can maximize value, preserve relationships, and avoid deal-killing missteps.
Why Reducing Friction Matters in Selling a Business
Friction in the process of selling a business often results in missed deadlines, unnecessary legal complications, buyer skepticism, and lower valuations. Friction can arise from poor preparation, miscommunication, lack of transparency, or even cultural mismatches between buyer and seller.
The goal of reducing friction is to maintain momentum, build trust, and ensure the deal progresses efficiently toward closing. After all, time kills all deals—so anything that stalls progress can cost you millions or derail the transaction entirely.
The 5 Most Common Sources of Friction When Selling a Business
Identifying the sources of friction early in the sale process allows you to proactively solve them. Below are the five most common culprits:
1. Incomplete or Disorganized Financials
One of the top reasons buyers walk away is messy or inconsistent financial documentation. If the financials do not align with tax returns, or if there are excessive add-backs without proper justification, trust erodes quickly.
Solution: Engage a qualified CPA or M&A advisor to normalize your EBITDA, prepare a Quality of Earnings (QoE) report, and ensure all documents are audit-ready.
2. Lack of Clarity Around Deal Structure
Many sellers focus too much on the valuation number and not enough on how that number is structured—whether it involves earn-outs, seller notes, working capital adjustments, or rollover equity.
Solution: Know your walk-away terms and consult your M&A advisor or investment banker to model different deal structures in advance.
3. Poor Communication With Key Stakeholders
Employees, partners, vendors, and even family members can become deal liabilities if not properly informed or aligned. Leaks, confusion, or internal politics often lead to buyer concerns.
Solution: Develop a communication plan for when and how to notify employees during the M&A process, and align internally before launching the sale.
4. Unrealistic Valuation Expectations
Overestimating what your business is worth is one of the most damaging mistakes. Buyers today are sophisticated, and a lack of comparables or supportable growth projections will lead them to walk away or issue low-ball offers.
Solution: Get a professional valuation before going to market and understand how your company stacks up against others in your industry.
5. Not Being Deal-Ready
If your legal, HR, and operational documents aren’t in order, the due diligence process becomes a minefield. Buyers don’t want surprises, and they’ll either reduce their offer or walk if they discover legal risks or compliance gaps.
Solution: Conduct your own internal diligence before going to market. Have all contracts, agreements, IP documentation, and HR files organized in a secure data room.
How to Create a Smoother Experience When Selling a Business
A frictionless M&A process doesn’t happen by accident—it requires preparation, clarity, and expert guidance.
Hire the Right M&A Team
Engaging the right team of advisors can dramatically reduce friction. This includes an M&A advisor or investment banker, a deal-savvy attorney, and a CPA with experience in transaction support.
M&A Advisor: Markets the deal, attracts buyers, and negotiates on your behalf.
Attorney: Ensures your interests are protected and that contracts reflect the agreed-upon deal.
CPA: Helps structure the deal tax-efficiently and validates the numbers.
Prepare a High-Quality CIM Before Selling a Business
A Confidential Information Memorandum (CIM) is the central marketing document that tells your company’s story. A weak or generic CIM creates confusion and stalls interest.
Tip: Your CIM should clearly outline your company’s financials, growth trajectory, key differentiators, and potential risks with mitigation strategies. It should also include adjusted EBITDA calculations and normalization schedules.
Know Your Buyer Archetypes
Not every buyer is the same. Institutional buyers (private equity, family offices) look for different things than strategic buyers or individuals.
Private Equity Buyers may want sellers to stay on post-sale and roll equity.
Strategic Buyers are looking for synergies and may care more about integration fit than EBITDA.
Individual Buyers might need financing and take longer to close.
Tailoring your pitch to the right buyer profile can reduce misunderstandings and speed up negotiations.
Key Negotiation Tips to Reduce Friction When Selling a Business
Set Expectations Early
Don’t wait for a Letter of Intent (LOI) to define your expectations. Clarify upfront what you want from a deal—whether it’s full exit, majority recap, or minority investment.
Buyers respect sellers who are clear and prepared. It shows you're not wasting time.
Be Transparent About Risks
Trying to hide warts only delays the inevitable. Buyers expect some risks. Disclose known issues early, whether it’s customer concentration, litigation, or employee churn. If you’re upfront, you maintain credibility—and possibly reduce the severity of their concerns.
Structure with Flexibility in Mind
Rigid deal terms often create standstills. Sellers who are open to options like earn-outs, seller financing, or transitional roles often receive higher valuations or better overall terms.
Emotional Intelligence Plays a Role in Selling a Business
The emotional side of selling a business is often underestimated. For many founders, their business is their identity. But emotion can cloud judgment and delay decision-making.
Avoid Falling in Love With Your Own Deal
It’s easy to believe your company is worth more than it is. But the market determines value—not your emotional attachment. The more objective and open-minded you are, the smoother the deal will progress.
Don’t Chase Every Buyer
Not all interest is good interest. If a buyer keeps asking for information without progressing or making offers that don’t align with your goals, it’s okay to walk away.
A focused process with fewer but more qualified buyers is better than chasing dozens with no clear timeline.
Final Thoughts on Selling a Business With Less Friction
Selling a business will never be without complexity, but it doesn’t have to be chaotic. By preparing properly, setting expectations, surrounding yourself with the right team, and keeping the process professional and transparent, you’ll not only reduce friction—but likely increase your final sale price.
If you’re considering selling your business and want to avoid the common pitfalls, reach out to a qualified M&A advisor who can guide you through the process and protect your interests.
Dr. Allen Nazeri, aka "Dr. Allen," boasts over 30 years of global experience as a healthcare entrepreneur. He is the Managing Director at American Healthcare Capital and Managing Partner at PRIME Exits. Dr. Allen provides strategic growth consulting to leadership teams of both privately held and publicly listed companies, ensuring their preparedness for successful exits.
He holds a Dental Degree from Creighton University and an MBA in M&A and Investment Banking from the University of Bedfordshire. He is also a Certified M&A Professional (CM&AP) from Kennesaw State University.
Dr. Allen is the author of two books on M&A:
He offers a free valuation to business owners ready for a partial or complete exit strategy. Dr. Allen collaborates with strategic buyers, private equity firms, and institutional investors, taking direct accountability for the annual successful sell-side representation of nearly $750M in enterprise value.
To have a confidential discussion about your company and receive a free valuation, email: Allen@ahcteam.com or Allen@ahcpexits.com
You can now communicate directly with Dr. Allen's AI clone:https://www.delphi.ai/drallen
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