What selling actually looks like.
Most owners sell a company once. If you’ve never been through it, the process can feel opaque: a series of requests and terms with no explanation, arriving while you’re still running the business. Here’s the straight version, start to finish.
Every deal is different, but this is the shape of most of them.
01
A first conversation
No NDA, no financials, no materials. Thirty minutes to understand what you’ve built and what you want from the next few years. Nothing binding, and plenty of people have this conversation two years before they’re ready to do anything.
02
Confidentiality and a first look at the numbers
If it makes sense to keep talking, we sign an NDA and you share the basics: two or three years of profit and loss, revenue by manufacturer line, and headcount. Usually a week or two, and enough for us to tell you whether this is real.
03
A preliminary range
We come back with a value range and the reasoning behind it. It’s not an offer and it’s not binding, but it tells you early whether we’re in the same neighborhood, before you’ve invested months.
04
Letter of intent
This sets price, structure, your role afterward, and a timeline. It’s non-binding on the deal itself, but the exclusivity and confidentiality provisions do bind, so it’s the point where you stop talking to other buyers. Usually two to four weeks to negotiate, and worth taking seriously, because most of what matters gets decided here.
05
Diligence
The longest and hardest stretch, typically sixty to ninety days. A quality of earnings review examines your financials in detail, particularly your add-backs. Legal counsel reviews contracts, corporate records, and litigation. In this industry there’s a real focus on manufacturer agreement assignability, service contract and consignment inventory accounting, and customer and contract review by surgeon and facility.
06
Documentation and financing
Purchase agreement, disclosure schedules, and the working capital peg, which is the amount of working capital that has to be in the business at close. It sounds technical and it’s worth understanding, because a peg set badly is a price reduction by another name.
07
Close and transition
Funds move, ownership changes, and the part that matters most starts. What that looks like depends on what we agreed, which is why your role after close is a letter-of-intent conversation.
Total timeline: typically four to seven months from a serious first conversation to close. It can move faster when the business is well documented and the parties are aligned.
Everything above describes a direct sale to a single partner, which is what a conversation with us looks like. A banked process runs differently. Your investment banker prepares a confidential information memorandum, you give management presentations, and several buyers submit indications of interest. The timeline and the work on your end both go up. Both routes are legitimate, and this page describes the one we’re part of.
Diligence is where deals die, and in this industry it’s usually the same handful of things.
Here’s what you can do about each one beforehand.
Manufacturer agreement assignability
Your distribution rights are probably the most valuable thing you’re selling, and most of them live inside a manufacturer agreement with a change-of-control clause. Some manufacturers require consent before an ownership change, and a few can terminate outright. Finding that out in week nine, on your largest line, is how a deal dies.
What to do
Pull your manufacturer agreements now and read the assignment and change-of-control language. You don’t need to ask for consent yet. You need to know which relationships will require it and who has to sign off.
Service contracts and recurring revenue
If part of your revenue comes from service or maintenance contracts, a buyer will want to see the contracts, the renewal history, and how much of the revenue repeats. Contracts that are verbal, expired, or tied to one customer contact are hard to count on, and the number gets discounted.
What to do
List every service contract with its term, renewal date, and annual value, and separate recurring service revenue from one-time equipment sales in your reporting.
Rep retention and territory relationships
The surgeon relationships that drive your revenue live with your reps, not with the company on paper. If a key rep walks after a sale, or a non-compete turns out to be unenforceable, the volume can walk with them. A buyer will look hard at how tied your reps are to the business versus to their own book.
What to do
Know which reps carry disproportionate volume, what their agreements say about non-competes and territory ownership, and think now about what would keep them through a transition.
Consignment inventory accounting
A lot of the inventory in this business is manufacturer-owned and held on consignment. Diligence needs to cleanly separate what’s yours from what’s consigned, and how revenue gets recognized against it. Financials that blur that line take longer to get through a quality of earnings review.
What to do
Before diligence, make sure your books clearly separate owned inventory from consigned inventory, and that your revenue recognition around consignment sales is documented.
Customer concentration by surgeon or facility
Revenue concentrated in a handful of surgeons or one hospital system isn’t automatically disqualifying, but it changes how a deal gets structured. It’s usually the difference between a straightforward offer and one with a bigger earnout attached.
What to do
Map your revenue by surgeon and by facility before anyone asks. If there’s a way to broaden the base in the next year, that’s often the highest-return move available before a sale.
Add-backs and owner dependence
The general ones still apply: personal vehicles on the books, family on payroll, and a manufacturer or hospital relationship that’s really just you. A quality of earnings review tests every add-back, and a business where the owner is the relationship gets discounted for it.
What to do
Write down which manufacturer or hospital relationships run through you personally, and start introducing a second point of contact this quarter.
None of this is unfixable. All of it is cheaper to fix now than to explain in week nine.
What actually moves the number in these businesses.
We won’t put multiples on a website. They move with the market and vary by what you’ve built. What we can tell you is what a buyer looks at while building the number.
Manufacturer agreement strength
Exclusivity, territory protection, and how long the relationship has run all matter more than revenue alone. An agreement that’s been renewed for a decade tells a buyer something a P&L can’t.
Recurring service revenue
Service and maintenance contracts that renew year after year are worth more than one-time equipment sales, because a buyer can count on them. Contract length, renewal history, and the share of total revenue they represent all matter.
Product mix
A diversified set of products is preferred over dependence on one or two suppliers. Strong relationships with multiple suppliers reduce risk, especially in specialties where manufacturer consolidation is frequent.
Contract terms with hospitals and GPOs
Where you have one, contract length and renewal history matter. Not every relationship in this business runs on paper, but the ones that do are worth more than the ones that don’t.
Almost none of these move in a month. Most move over a year or two, which is a good argument for having this conversation before you’re ready.
What makes the process survivable.
Get your own advisors
An attorney with transaction experience and a CPA who understands your books. We’d rather negotiate with a well-advised seller. Deals with a competent counterparty on the other side close more often.
The tiring part is diligence
It arrives while you’re still running the company, and it goes on for weeks. Knowing that going in is most of what makes it survivable.
If any of this raises questions about your own situation, ask us. We’re happy to walk through it whether or not we ever do a deal.
Questions owners think but don’t always ask.
Will you keep my people?
Can I stay involved?
Can I keep a piece of the business?
Do I need to hire an investment banker?
How do I know you can actually close?
Is this confidential?