Selling a Business With Partners? Align Before Going to Market
- Mark Hartmann, MBA
- Jun 10
- 9 min read
Your business partners may be the last people you’d expect to throw a wrench into the deal. But misalignment on price, timing, and terms costs real money at the table.
You’ve run a business with your partners for 20 years.
You’ve agreed on hiring, on capital, on which clients to chase and which to pass on. Sure, you’ve had the occasional disagreements that come with running a company together. But you’ve come out the other side every time. That’s what good partners do.
So when it comes time to sell, it’s easy to assume that same alignment will carry over.
But that’s not always how it plays out.
You can agree for decades on how to run a business and still be miles apart on how to leave it. Most partners don’t see this gap until a buyer is already in the room.
By then, it’s too late to fix quietly.
In my book, Sweat Equity Payday, I write about the Five Ds: death, divorce, disagreement, disability, distress. These threats can force any business owner into an unplanned exit. But disagreement can just as easily weaken a planned sale.
One partner wants top dollar and will wait for the right offer.
Another wants to roll equity and stay on with the buyer for three to five years.
A third has a hard timeline due to health, family, or burnout and won’t move off it.
None of these positions is wrong. They just don’t fit neatly into a single deal, and no buyer is going to draft three separate transactions. When the letter of intent (LOI) that spells out the deal’s terms hits the table, every one of those differences needs to be settled.
If you’re working them out for the first time in front of a buyer, you’ve already lost leverage.
Five Questions Every Partner Should Answer Before Going to Market
When you have more than one owner, every partner needs to answer these questions for themselves. And those answers don’t always line up.
What do you want your life to look like the day after closing? Maybe you’re ready for full retirement. Maybe you want to stay on as a consultant. Maybe you want to take your share and start something new. The way the deal is structured depends on these answers. If you and your partners aren’t on the same page, you’ll either work it out together before buyers get involved or settle it at the table on the buyer’s terms.
What’s your number? Not what you think the business is worth, but the number that lets you walk away happy. It’s easy to assume everyone shares the same number just because you share the business. But your number is yours, and your partners have their own.
How long are you willing to wait? The honest answer is probably longer than you’d like. A business that takes a year or two to clean up its financials, reduce owner dependence, and lock in revenue will usually fetch a higher price than one that goes to market the moment someone gets the urge to sell. But that kind of preparation only works if every partner is on board with the timeline. If one partner checks out while the others work to build value for another 18 months, it drags down the numbers. And buyers will spot it right away.
What’s your walk-away point? Every seller needs to know theirs. But with three partners, you have three different walk-away points. You need to get aligned before any offers come in. If one partner won’t move off twelve million, another is happy at ten, and the third would take nine tomorrow, you’re not on the same team. You’re setting yourselves up to negotiate against each other instead of with the buyer.
How much risk are you willing to carry after closing? Few deals are all cash on day one. The buyer may want a seller note, where part of your price gets paid over time instead of at closing. They may tie another piece to an earnout, money you collect only if the business hits its targets after you’ve gone. Or they may want rollover equity, in which you reinvest some of your proceeds into the new company and remain a minority owner. Each one keeps you on the hook in a different way. Do you want to keep some chips on the table, or be out clean? One partner’s answer isn’t always another’s, and it drives the whole structure of the deal.
Your Operating Agreement Was Written for a Different Business
Most partnerships have an operating agreement, and many include a buy-sell provision that spells out what happens if one partner wants out and the others don’t. In theory, that should prevent the kind of misalignment we’re talking about.
But in practice, it usually doesn’t work that way. Here’s why.
Most buy-sell provisions were drafted when the business was smaller, the partners were younger, and selling wasn’t on anyone’s radar. The valuation formula might still be tied to book value, or to a multiple nobody has revisited in fifteen years. It may not even account for a voluntary sale to an outside buyer. And the rules for who approves a deal, who can block one, and how the money gets split often have little to do with who’s running the company today.
Maybe you have a partner who owns a large stake but hasn’t been active for years, while the rest of you run the company day-to-day. On paper, the proceeds get split by ownership. In reality, the partners doing the work are funding the payout for someone who hasn’t been in the trenches. That kind of resentment tends to show up at the worst possible time.
If you have partners, pull the operating agreement and read it. Then ask one question: If a buyer puts a real number in front of us tomorrow, does this document reflect how we’d actually want the deal to work?
This isn’t a do-it-yourself legal project. The point isn’t to try to rewrite the agreement yourselves. You’re reading it to see if it still fits your business, your ownership group, and the exit you’re planning. If it doesn’t, get it in front of an M&A attorney while there’s still time to fix it. The middle of a live deal is the worst time to find out your buy-sell doesn’t hold up.
How Buyers Read Misalignment
A good buyer reads a partnership long before meeting it. It will be outlined in the Confidential Information Memorandum (CIM) your advisor prepares to take your company to market and tell its story to buyers. A clean story needs owners who agree on the basics: timing, roles, what happens after the sale. Split on any of those, and the uncertainty is in the CIM before a buyer ever picks up the phone.
Once you’re in the room, it’s just as obvious. Private equity groups and strategic buyers know exactly what misalignment looks like. If one partner is more motivated than the others, it shows up in conversations, body language, and who answers the tough questions while others stay quiet. As soon as a buyer spots it, they shape the deal around the weakest link: less cash at close, more strings attached, longer transition periods, and terms that work for one partner but create headaches for the rest.
Now you’re negotiating with each other instead of with the buyer. The partner who needs the deal most ends up setting the floor for everyone.
It’s a buyer’s job to find your true position, and a misaligned partnership is an easy target. This isn’t predatory. It’s just how negotiation works.
Before You Go to Market, Get Agreement On…
If you and your partners aren’t aligned, the market will find it. The only question is whether you settle it privately first or publicly after your leverage is already gone. |
The Negotiation Before the Negotiation
The deal is the second negotiation. The first is the conversation between partners.
It's harder than anything you'll do with a buyer. It asks each partner to say out loud what they want, what they're afraid of, and what they're willing to give up. It asks for honesty about who's been doing the work and who's been coasting. It asks you to look at assumptions you've carried for years and decide whether they still hold.
Most partners never have this discussion on their own. They've never had to. The questions are too big, the stakes too personal, and the relationships get in the way of the directness it needs. So it waits until a buyer forces it, and by then the leverage is gone.
The partners who do this well don't wait. They have the hard conversation early, with someone in the room who has done it before and knows what each answer means once a deal is live.
That's where my work with partners begins, well before the business goes to market. Some have been together thirty years; some barely speak. We get the hard questions on the table early, before an LOI, an attorney, or a lender drags them out on someone else's timeline.
That's the work that gets all of you speaking with one voice. And one voice is the difference between a deal that closes on your terms and one that closes on the buyer's.
You’ve spent decades building this business. Leave it the way you want to, with a clear plan and the right people in the room.
You only sell your business once. Make it count.™
If you have partners and you're thinking about selling, the first conversation isn't with a buyer. It's the one I help you have with each other.
Frequently Asked Questions
|
Mark Hartmann is a former business owner turned M&A advisor—and the author of Sweat Equity Payday—who knows firsthand what it takes to build, grow, and sell a successful company. A three-time Inc. 5000 CEO honoree, he led his own eight-figure sale and now helps business owners sell companies worth $1M to $25M. Mark understands that selling a business is personal, not just financial. That’s why he works closely with owners to maximize value, protect their legacy, and transition on their terms.
He holds an MBA from Eastern University and a master's degree in organizational change management from St. Elizabeth University, as well as Certified M&A Professional (CM&AP), Certified Business Intermediary (CBI), Certified Exit Planning Advisor (CEPA), and Certified Value Builder (CVB) credentials.
44 Washington Street, Unit #1080
Morristown, NJ 07960
(855) 652-7577
HartmannRhodes advises owners of companies typically valued between $1–$25 million. If you’d like a structured pre-sale valuation review and a readiness roadmap, we can walk you through the process and tailor it to your timeline and goals. Contact us today!