💣 You'll learn: How market timing, partner alignment, and working capital requirements can make or break your exit — and why waiting too long is a trap.

⏱️ Read time: 5 minutes

🔍 Real deal analyzed: A custom cabinet manufacturing business with three owners and misaligned exit timelines

THE REAL DEAL

A Solid Business Meets Pride and Poor Timing

I first looked at this cabinet manufacturer in 2021. It was a solid business with established operations, quick project turnarounds, and proven manufacturing processes.

Three owners ran the show: two founding partners and one partner's son. The main owner was ready to retire, while the others wanted to stick around for two more years before their own exits.

They were asking 5x adjusted EBITDA (that's earnings before interest, taxes, depreciation, and amortization, or simply put, the real cash your business generates after removing one-time expenses and owner perks).

The price tag was steep, and they didn’t want to leave any cash behind for me to run the company. Most concerning was their practice of not taking deposits on cabinet orders. I offered 4x EBITDA with proper working capital requirements, but they weren't interested.

DEAL DETECTIVE

When Time Becomes Your Enemy

Here's how this story unfolded:

2021: Declined 4x EBITDA offer, confident in their valuation

2022: Market shifts led to 25% EBITDA drop

2023: Health issues and another 25% EBITDA decline

2024: Record-high interest rates =  dying demand and trapped

VALUE VAULT

Hard Lessons for Both Sides of the Deal

For Sellers: Start exit planning before you need to exit. Get partner expectations aligned in writing, agree that you’re going to leave some cash in the business, and understand that market timing significantly impacts value. Most importantly, don't let pride prevent you from taking a fair offer — the next one might not come.

For Buyers: Look for businesses with aligned partner interests, knowledgable sellers and/or advisors, and realistic valuation expectations. Watch for yellow flags like no customer deposits in project-based businesses, and ensure sellers understand why working capital matters early on.

The Outcome: Today, this business is worth less than half its 2021 value. The owners remain unable to exit, trapped by market conditions and health challenges they never saw coming. What could have been a successful retirement has become a cautionary tale about the true cost of waiting too long.

Stay rebellious,

kinza

p.s. Get the same 10-point checklist I use to evaluate business exits for free, here.

p.p.s. I’ll advise on your acquisition or exit strategy. Just reply to this email with “need help.”

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