25 Jun Selling a Business to Family: Are You Leaving Money on the Table?
Q&A with David & Jay
Question:
Can I afford to sell my business to my son/daughter, or am I leaving too much money on the table?
Answer:
It is not uncommon for a business to have a different value to different buyer types—and even different buyers within a type or group.
Let’s look at a simple example: A business with $20 million in revenues has an EBITDA of $3 million. Let’s assume for the sake of this example, this industry typically sells at a 7 multiple of EBITDA.
One might assume it is worth $21 million to a regular buyer stepping into the owner’s role, such as a son or daughter.
However, a competitor might be able to merge the seller’s plant into their existing warehouse, saving $1M per year in rent. Thus, they might be willing to offer more, perhaps $24-$27 million.
This is what the business is worth to them—a unique buyer with a special circumstance (available space in the warehouse). It does not make this business worth this level to the kids.
Only you can decide what is the right move for your family. Does the next generation have the skills and desire you did to be an entrepreneur, and are they the right people to grow the business for the next 20 years?
Takeaway:
A business’s value depends entirely on the buyer. Strategic competitors can often pay a premium due to cost-saving synergies, while family members typically pay standard market value. Ultimately, you must weigh maximum financial payout against your family legacy.
During the 2025 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors’ David Humphrey and Jay Galasso presented an AMA (Ask Me Anything) to the CPA firm partners attending. In this Q&A series, Beacon publishes some of those questions to help business owners make important decisions about the future of their company.