Build a Business That Sells: M&A Expert Mark Hartmann's Playbook for a Successful Exit

Only two out of ten lower middle market businesses successfully sell. If you are a founder planning to exit in the next few years, those odds should concern you. The difference between a life-changing payday and a failed sale often comes down to preparation that starts years before you go to market.

Mark Hartmann, M&A Advisor and Business Broker at HartmannRhodes, has seen this pattern play out hundreds of times. After bootstrapping his own company to an Inc. 5000 exit in 2017, he now helps business owners in the $1 million to $25 million range achieve their own successful exits. His message is clear: the work you do today determines whether you get your payday tomorrow.

What Buyers Actually Want From Your Business

Stop thinking like an operator. Start thinking like an acquirer.

"Business buyers are buying transferable revenue that translates to transferable profits."

This distinction matters more than most founders realize. Buyers are not purchasing your history or your hard work. They are purchasing predictable future cash flows that will continue after you leave. If your revenue depends on your personal relationships, your institutional knowledge, or your daily involvement, expect a significant discount on your sale price.

The lower middle market presents unique opportunities right now. Mark explains the shift: "People leaving Wall Street, taking their IRA, their 401ks, and they're investing that in small businesses. I think that's really great that they see the entrepreneurial upside that exists with these lower-middle-market businesses."

More sophisticated buyers means more competition for well-prepared companies. Position yours correctly and you will attract premium offers.

The Kidnap Test: Can Your Business Survive Without You?

Mark uses a simple thought experiment to reveal the biggest risk in most founder-led businesses.

"If I kidnap you for the rest of the afternoon, how would it function? Rest of the week? How about the rest of the month? Okay, I'm kidnapping you for a quarter."

If your business cannot function for a quarter without you, buyers will notice. They will wonder what happens to customer relationships when you exit. They will question whether the team can execute without your guidance. And they will adjust their offer accordingly.

Mark learned this lesson firsthand. Three years before selling his company, he received a lowball offer and realized the problem immediately.

"The problem was the guy in the mirror."

Amy Osmond Cook, Co-Founder and Chief Marketing Officer at Fullcast, experienced the same challenge: "I was deep into the customer success. I was deep into the operations of the business, and that turned out to be a detriment to me because they couldn't do it without me."

Three Areas to De-Risk Before You Sell

Mark recommends starting two to three years before your target exit date. Focus on these three critical areas:

1. Key People

"Think about your key salespeople. Is there a backup for the key accounts so that it's not just tied to one key salesperson? Do they have a backup so that there's a consistency and that there's a continuity that exists?"

Build redundancy into your sales organization. Cross-train account managers. Document tribal knowledge before it walks out the door.

2. Customer Concentration

No single customer should represent a disproportionate share of revenue. Concentration risk terrifies buyers because losing one account could devastate the business. Diversify your customer base systematically.

3. Vendor Dependencies

"You make widgets. Maybe you make plastic widgets. Do you get your plastic from one supplier, or can you get it from many suppliers?"

Single points of failure in your supply chain create risk that buyers will price into their offer. Develop backup relationships now.

Ride the Roll-Up Wave

Industry consolidation has created exceptional exit opportunities for prepared sellers. Mark describes the trend: "Roll-ups 15, 20 years ago were done with companies that were 50 and $100 million. Now they're doing that on a much smaller scale."

Private equity sponsors are actively acquiring platform companies and rolling up smaller competitors to build market share. Home services, HVAC, and similar industries have seen significant activity.

"Home services is one of the hottest spaces right now, and they've enjoyed the benefit of grow a business, build a business, and you'll get a solid exit."

Understand whether your industry is consolidating. If so, strategic buyers may pay premium multiples for quality assets.

Your Exit Action Plan

The path to a successful exit requires deliberate preparation:

1. Start now. Two to three years of de-risking separates successful exits from failed ones.
2. Pass the kidnap test. Remove yourself from daily operations until the business thrives independently.
3. Reduce concentration risk. Diversify customers, build bench strength in key roles, and establish backup vendor relationships.
4. Understand your market. Know whether your industry is consolidating and position accordingly.

"When it's time to sell, they should focus on running their business and let me focus on running the deal."

For business owners planning an exit in the next one to two years, Mark is offering a complimentary copy of his book. Connect with him through HartmannRhodes or reach out on LinkedIn to claim your copy.