Dear BTF Community,
Building a business to sell doesn’t mean you have to sell it.
It means creating a company with strong leadership, credible financials and enough independence from its owner to give you choices when opportunities arise.
After advising on hundreds of transactions representing more than $50 billion in deal value, Mackenzie Regent, Co-Founder & Managing Partner of Kalos, has seen what separates businesses that have options from those forced to play catch-up.
Her advice to owners is to focus on building a better business first. The exit decisions can come later.
Key Takeaways for Business Owners:
- Building to sell and building to keep require many of the same fundamentals.
- Buyers need confidence that the value of the business will remain after the owner leaves.
- Optionality matters because the opportunity to transact may arrive before you expect it.
Enjoy,
Mark
Build To Sell Or Build To Keep?
Owners are often encouraged to decide whether they’re building a company to sell or one they intend to keep.
Mackenzie doesn’t see those paths as fundamentally different.
“You can build to sell and still choose not to. Either way, you’ve built a better business.”
A company with strong financial reporting, capable leadership, repeatable systems and transferable customer relationships is attractive to a buyer. Those same qualities also make it easier to operate, scale and retain.
For Mackenzie, the owner’s North Star should remain straightforward: keep making the business better.
Doing so creates options. An owner can continue growing, bring in capital, pursue acquisitions or consider a sale from a position of greater strength.
The alternative is discovering you want an option you haven’t prepared for.
What Is A Buyer Actually Buying?
Founder involvement can be a tremendous advantage while building a company. It becomes more complicated when the value of the company can’t be separated from the person who created it.
Mackenzie frames this through the distinction between personal and commercial goodwill.
“If the business can’t function without you, you have to ask: what is the buyer actually buying?”
That question goes to the heart of transferability.
If relationships, decision-making and institutional knowledge remain concentrated with the founder, a buyer may need that founder to stay after closing. That can affect valuation and restrict the owner’s ability to make a clean exit.
Building a deeper leadership bench takes time. Mackenzie uses a simple test:
“If you can’t go on vacation and have the business run without you, you’re not there yet.”
Giving leaders genuine responsibility before a transaction allows the business to prove it can perform without the founder at the centre of every decision.
Don’t Make Buyers Work To Believe Your Story
Owners know their businesses intimately. Buyers don’t have that luxury.
They rely on financial information, diligence and the quality of what they’re shown to determine whether the story they’re hearing is credible.
“Valuations are ultimately a risk assessment on the financial performance of your business.”
An owner may know that a difficult quarter was an anomaly or that future performance will be stronger. A buyer still needs evidence.
Poor financial information introduces friction. If a buyer spends too much time reconstructing the company’s performance before they can assess it, Mackenzie warns they may simply move on to another opportunity.
That matters even more in a market where buyers have choices.
As one of Mackenzie’s buy-side clients put it, the problem isn’t the quantity of opportunities coming across their desk. It’s finding quality opportunities among them.
Preparation helps a company distinguish itself before negotiations over price even begin.
Trust Can Matter As Much As The Numbers
Diligence is designed to uncover problems. Trying to hide them can create a much larger one.
Mackenzie sees trust and transparency as fundamental to a successful transaction.
“Business owners can be tempted to shy away from their weaknesses, but you’ll get much further by being honest about them.”
Every company has weaknesses; buyers know that.
What changes the dynamic is discovering something the seller should have disclosed. Once trust is damaged, the buyer may begin questioning what else they haven’t been told.
That human element can be underestimated in a process dominated by financial models, diligence requests and legal documents.
A buyer still needs to believe they can trust the person sitting across the table.
Technology Is Raising The Bar For Diligence
Technology is changing both what buyers value and how they investigate it.
A company that can demonstrate genuine efficiencies through technology may strengthen its growth story. At the same time, buyers and their advisors now have tools capable of analyzing far more information during diligence than was previously practical.
Historically, there was a natural limit to how much data a team could manually review within a deal timeline. Mackenzie believes that ceiling is moving.
That creates a new expectation for sellers.
As diligence becomes more technology-enabled, businesses need the systems and quality of information required to withstand deeper analysis.
Being “tech enabled” may help tell a compelling story, but the technology available to the other side is also making that story easier to test.
Prepare For The Opportunity You Didn’t Plan
Mackenzie has experienced the value of optionality from both sides of the table.
Kalos received unsolicited acquisition offers at a point when the firm wasn’t looking to sell. The process still proved useful, prompting the leadership team to think differently about its strategy and pursue opportunities it might otherwise have overlooked.
For business owners, that’s an important distinction.
Preparing for a transaction doesn’t require deciding today that you want one.
“You can always choose not to pursue an opportunity, but if you’re not ready when it comes, you may leave real opportunity and value on the table.”
The decision to sell can be made relatively quickly. Building a company capable of attracting the right offer cannot.
Final Reflection
For owners five or ten years from a possible transition, Mackenzie’s advice extends beyond financial preparation.
She encourages them to think about what success eventually looks like for them personally.
“Think about your North Star. What does success look like for you 10 years from now? Everyone’s answer will be different, but you need to know yours.”
That answer can change. The important part is creating a business strong enough to change with it.
Mackenzie will continue this conversation at BTF Vancouver on November 18 as part of The Growth Playbook: Build to Sell or Build to Keep?, exploring how owners can build value while preserving the freedom to decide what comes next.