What Indiana Businesses Get Wrong About Selling Their Company
The short answer: Most of the costly mistakes in a business sale don’t happen because the business wasn’t good enough or the price was too far off. They happen because one or both parties walked in with assumptions about how the process works that turned out to be wrong. The letter of intent is not a done deal. Interested buyers are not always qualified buyers. Deal structure is not one-size-fits-all. And going through the process without experienced advisors tends to cost more than hiring them would have. This post covers the misunderstandings that most consistently cause Indiana business owners real problems.
There’s a version of selling a business that most owners imagine before they go through it. The business gets listed, qualified buyers come in, a price is agreed on, paperwork gets signed, and the money shows up. It’s cleaner in the imagination than it ever is in reality, and the gap between the two is where most deals run into trouble.
After more than 871 transactions across Indiana, the surprises I see aren’t random. The same misunderstandings come up again and again, on both sides of the table, and most of them were avoidable if the person had a more accurate picture of what they were walking into.
The Letter of Intent Is Not the Finish Line
This is probably the most common and most damaging misconception sellers carry into a deal. Once a buyer signs a letter of intent, the natural reaction is relief. Someone is committed. The hard part is over.
It isn’t. The LOI outlines general terms, but it’s almost always non-binding, and the work that follows, which is due diligence, is where deals actually live or die. During due diligence, the buyer’s team combs through three years of financials, reviews contracts and leases, examines customer concentration, checks for tax liabilities and outstanding legal issues, and evaluates everything the seller represented during marketing. If they find something that doesn’t match what they were told, or something that changes the risk profile of the business, they have the right to renegotiate or walk.
This is not an unusual outcome. A meaningful percentage of deals that reach the LOI stage never close, and many of the ones that do close on different terms than what was originally agreed on. The best thing a seller can do is treat due diligence as seriously as they treated getting the LOI, not as paperwork formality on the way to the wire transfer.
Not Every Interested Buyer Is a Qualified One
When an inquiry comes in on a listed business, it’s easy to treat it as momentum. Someone wants to buy the company. That’s good news. But interest and qualification are different things, and confusing them wastes months of a seller’s time.
Some buyers are genuinely exploring. They haven’t secured financing, haven’t worked with a lender to understand what they can actually close on, and haven’t thought carefully about whether this specific business fits their situation. They’ll sign an NDA, receive confidential financials, ask questions for weeks, and eventually go quiet. In the meantime, the seller has been distracted, sometimes to the point where business performance starts to slip, which creates its own problems.
Good vetting upfront, proof of funds, a buyer profile, a conversation about financing, separates the serious buyers from the ones who are still figuring out whether they’re ready. This is one of the things an experienced broker handles directly, so the seller doesn’t have to.
Deal Structure Has More Variables Than Most People Realize
When sellers think about the sale price, they tend to picture a number and a wire transfer. The reality is that the purchase price is only one part of a structure that can be shaped in a lot of different ways, each of which affects what the seller actually walks away with.
A deal might include cash at closing, seller financing where the buyer pays a portion of the price over time, an earn-out tied to future business performance, or some combination of all three. The allocation between asset classes in the purchase agreement affects the seller’s tax treatment significantly. Working capital adjustments can shift the effective price by tens of thousands of dollars. The deal structure that looks best on paper isn’t always the one that puts the most money in the seller’s pocket after taxes.
Indiana business owners who don’t have an accountant and an M&A attorney involved before they get to the purchase agreement stage regularly leave money on the table, not because they negotiated badly, but because they didn’t understand the variables well enough to know what to push on. Sellers who do understand the structure have a real advantage.
Partial Sales Are a Real Option
A lot of business owners assume that selling means handing over everything and walking away. That’s one way to do it, and for many sellers it’s the right way, but it’s not the only option.
Transactions can be structured to sell a majority stake while the original owner retains a portion and stays involved. Recapitalizations, where a financial partner buys in and provides liquidity while the owner continues to operate and benefit from future growth, are common in the lower middle market. Strategic partnerships with a larger company can sometimes achieve similar outcomes.
For owners who aren’t ready to fully exit, or who think the business still has significant value growth ahead of it, exploring these structures is worth the conversation. The assumption that it’s all-or-nothing keeps some owners from ever starting the process.
Going Through This Alone Costs More Than It Saves
The logic of handling a business sale without professional advisors is understandable. The fees look large in the abstract. But the math almost always works against it in practice.
An M&A attorney protects the seller in the purchase agreement from representations and warranties that could expose them to future liability after closing. An accountant structures the deal in a way that minimizes the seller’s tax burden, which on a $1 million to $3 million transaction can be the difference of $50,000 to $200,000 or more. A business broker handles buyer qualification, manages the negotiation, and keeps the deal moving through due diligence so the seller can keep running the business. When a business’s performance declines during the sale process because the owner is distracted, it shows up in the buyer’s due diligence and can directly reduce the price.
The sellers who try to handle this themselves aren’t usually saving money. They’re deferring costs in ways that are harder to see.
Frequently Asked Questions
Is a letter of intent binding when selling a business in Indiana? In most cases, no. The letter of intent is a framework document that outlines the general terms both parties have agreed to, but it’s typically non-binding on the purchase price and deal structure. The binding commitment comes from the final purchase agreement, which is signed after due diligence is complete. Until that document is executed, both sides retain the ability to renegotiate or walk away.
What happens during due diligence in a business sale? Due diligence is the buyer’s structured process of verifying everything the seller represented during the marketing and negotiation phase. It typically covers financial records going back three years, tax returns, customer contracts, employee agreements, lease terms, outstanding liabilities, and operational systems. It usually takes 30 to 60 days for most Indiana Main Street transactions, though more complex businesses or those with disorganized records can stretch to 90 days.
Can I sell only part of my Indiana business? Yes. Transactions can be structured to sell a controlling or minority stake, bring in a financial partner through a recapitalization, or create a phased exit where the owner sells a portion now and retains the rest. These structures are more common in lower middle market deals but are also available to Main Street business owners. The right structure depends on the seller’s goals, timeline, and how much involvement they want post-sale.
How do I know if a buyer is actually qualified? Qualified buyers have proof of funds or a verifiable financing plan, a clear acquisition rationale, and relevant background to operate the business. A buyer profile, personal financial statement, and a conversation with an SBA lender who knows the Indiana market are standard steps before serious negotiations begin. Buyers who resist basic vetting are usually not ready to close.
Do I need an attorney and an accountant to sell my business? Yes, and ideally both should be involved before you sign anything. An M&A attorney protects you in the purchase agreement, particularly around representations and warranties that can create liability after closing. An accountant or CPA helps structure the deal in a way that minimizes your tax exposure, which in a $1 million to $3 million transaction can affect the final amount you keep by $50,000 or more.
The Bottom Line
The deals that close well are the ones where both parties understood what they were getting into before they started. The misunderstandings covered here aren’t obscure technical issues; they’re things that come up in almost every transaction, and they’re a lot easier to navigate when someone points them out before they become problems rather than after.
If you’re thinking about selling your Indiana business and want an honest read on what the process actually looks like and what to prepare for, I’m happy to have that conversation. It’s confidential, there’s no cost to it, and most sellers find it more useful than anything they’ve read online.
Troy Frank Indiana Equity Brokers troy@indianaequitybrokers.com indianaequitybrokers.com
