For many business owners, the sale of a company represents the most significant financial event of their lives. Often built over decades—and sometimes generations—this transaction brings their life’s work to a single culmination. Despite its importance, the process is frequently all-consuming yet insufficiently planned.
“Over 60% of business owners admit they haven’t created an estate plan before selling their company, risking significant tax liabilities and missed wealth transfer opportunities.” — Exit Planning Institute
Estate planning is one of the most commonly overlooked areas prior to a transaction, and delays can be costly. Many business owners incorrectly assume they should sell the business, realize the proceeds, and then address estate planning. This approach often results in higher taxes and missed opportunities to transfer wealth more efficiently.
While estate planning is often avoided because it is associated with death, effective planning before a sale is fundamentally about value preservation. It can help reduce taxes, minimize the risk of family conflict, and ensure sale proceeds are distributed according to the owner’s intentions—both during life and after death.
Without proper planning, a significant portion of a business owner’s wealth may be lost to estate taxes—an outcome few desire. For owners whose wealth is largely concentrated in their business, estate planning is not optional; it is a critical component of thoughtful and successful exit preparation. By transferring shares into trusts or to future generations, owners can freeze today’s value ahead of a sale and take advantage of IRS-allowed valuation discounts for minority interests.
Sell-Side Diligence: Control the Narrative Before Buyers Do
Equally important to transaction planning is comprehensive sell-side diligence conducted in advance of going to market. Buyers will perform rigorous diligence—often in the form of a Quality of Earnings (QoE) analysis—and issues uncovered late in the process can delay a transaction, reduce value, or derail a deal entirely. Proactive sell-side diligence allows owners to identify and address risks on their own timeline rather than under the pressure of buyer scrutiny.
A key mindset shift is recognizing that a QoE is not an audit. A QoE is transaction-focused and designed to assess sustainable earnings power and the quality of financial performance leading into a deal, whereas an audit is tied to fiscal year-end assurance requirements.
By thoroughly reviewing financial, tax, legal, and operational matters before going to market, sellers can present a clear and credible narrative of the business. This preparation improves deal certainty and efficiency while strengthening negotiating leverage by reducing surprises and uncertainty—often contributing to smoother transactions and more favorable outcomes.
“In 2024, the IRS increased scrutiny on business transfers, making early planning more critical than ever for successful outcomes.”
Early preparation also expands optionality. If a compelling offer arises unexpectedly, readiness can be the difference between negotiating from a position of strength and negotiating under time pressure.
Bottom Line: Preparation Drives Outcomes
By addressing financial, tax, legal, and operational considerations well in advance, sellers can set realistic expectations and take control of the transaction process. This preparation not only improves deal certainty and efficiency, but also strengthens negotiating leverage by minimizing surprises. In many cases, effective sell-side diligence directly contributes to higher valuations, smoother transactions, and more favorable outcomes for business owners.
Eide Bailly works with business owners throughout the lifecycle—from strategic planning and value preservation to transaction readiness and post-liquidity advisory—helping clients navigate complexity and make confident, informed decisions before, during, and after a sale.
Paul Skeen, CPA Partner, Board of Directors
Paul’s experience in public accounting includes involvement in all aspects of financial and compliance audits, with emphasis in assurance services to governmental entities and dealerships. He has experienced knowledge of governmental reporting rules. Paul works hard to see clients’ business through their eyes. This means he will invest heavily in your working relationship and bring his experience to your benefit.