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One of the Biggest Disconnects We See Before a Sale

We see this time and time again, and it plays out something like this:

A founder comes to us running a $40M business. Profitability isn't where it should be for the industry, but the team is convinced the future is enormous. The market's coming their way. They're the leading brand in the space. So many good things are true about this business. And because of all that, they believe the vision is what they should be selling.

But most buyers aren’t buying a vision. They are looking at the economic profile and modeling a value they can improve upon.

We believe in the passion. We really do. But the buyer on the other side of the table has an investment committee to answer to. They're running your numbers against ten other opportunities sitting on their desk right now. And if the economics don't stack up, no amount of belief in the story is going to get you the exit you're expecting.

There's a real difference between the money that funds a vision and the money that buys a business. VCs are, in a sense, "vision capital." They'll bet on where you're going. Private equity doesn't work that way. They don't buy vision. They buy clarity about the future.

So if you're going the private equity route, and that's the route most founders in the $15M to $40M range end up looking at, you need to be honest with yourself about what you're actually asking a buyer to do.

If your numbers don't yet show the profitability your story promises, you're really saying: "I believe in this future so much, I'm willing to sell you a piece of it before it happens."

And here's the tension nobody wants to sit with: if you truly believe that much value creation is coming, why are you selling now, before it happens?

The honest answer is a trade. You're transferring the risk of that future to the buyer. In exchange, they discount what they'll pay you today, because now they're the ones carrying the uncertainty of whether your story actually plays out.

If a founder can't accept that trade-off, they're usually not ready for a transaction. Not because the business isn't good. Because they haven't reckoned with the risk they're creating for themselves the moment the deal closes.

This shows up even more when equity gets rolled into the deal. Founders often think rolling equity just means keeping some upside. It also means keeping the risk. If the growth doesn't show up the way you promised, you're the one still in the business when your new partner starts asking why you sold them A BAG OF GOODS.

None of this means don't sell on a strong story. It means know exactly what you're doing when you do.

Yes, there are exceptions right now. Some AI-native companies are getting paid on vision, because their growth curve is so steep that buyers are willing to underwrite the future. But even there, the market has gotten pickier. Buyers want to see something real underneath the story, not just the promise of it. So unless you're sitting on that kind of hypergrowth outlier, that's not the deal you're walking into.

Before you go to market, get honest with yourself about how much of your expected valuation is coming from what your business has already proven, and how much is riding on what you believe is coming. It's exactly why we built our Financial Readiness Evaluation the way we did: to separate what your numbers already prove from what you're still hoping they'll prove, before a buyer does it for you.

1️⃣ When I picture my ideal valuation, is it built on where the business is today, or where I believe it's going?

2️⃣ If a buyer discounted my price to account for the risk that future growth doesn't show up, would I still want to sell?

3️⃣ Am I open to rolling equity because I believe in the next chapter, or because I couldn't get the number I wanted upfront?

4️⃣ Have I actually looked at real market data for comparable businesses, or am I mostly trusting my own read on what my company is worth?

5️⃣ If the growth I'm counting on doesn't materialize for another 12–18 months, am I still willing to run this business through that stretch?

☑️ Separate your story from your numbers: Write down, in plain terms, what part of your valuation expectation is supported by trailing financials and what part is riding on a future that hasn't happened yet.

☑️ Pressure-test against real data: Before going to market, get a clear, credible read on how comparable businesses are actually valued, not just what similar-sounding companies reportedly sold for in headlines.

☑️ Decide your rollover appetite in advance: Figure out, before you're sitting across from a buyer, how much future risk you're genuinely willing to keep on your own balance sheet versus hand off completely.

That's all for this week. Remember that the gap between what a buyer offers and what you deserve isn't a negotiation failure. It's just the starting point. The founders who close the best deals are the ones who trust the process, and give buyers the time they need to get there.

If you want help thinking through your process design or negotiation strategy, reply to this email or contact us here. We're always happy to walk you through your options.

Talk next week,

Brian Dukes
Managing Partner at Exitwise