No line item for legacy: The reality of an owner-led exit

Over the next decade, millions of SMBs are expected to change hands as baby boomer owners retire. For those founders, selling will be one of the most significant moments of their careers, and it demands a very different skillset to the one that built the business in the first place. 

Emily Harris, Managing Director at Wayfinder Strategic Advisors, guides business owners through that process. Based in Houston, her investment bank specializes in M&A and financial advisory services. 

Emily shared what prompts founders to sell, the emotional reality of an M&A process, and the steps that separate a successful sale from one that falls apart. 

Q. Can you walk me through your career and how you came to focus on advising owner-led transactions? 

I’m a Certified Public Accountant (CPA) by background and spent my early career in audit and controller roles across large public companies, consulting firms, and privately-held family businesses. At the time, M&A wasn’t on my radar. 

That changed when I was introduced to the owner of a boutique investment bank who hired me to get his clients financially and operationally ready for market. The work introduced me to dealmaking, and I was hooked. So I earned my investment banking license and began advising on transactions.

My CPA background gives me a perspective many advisors don’t have, as I understand the business from the inside out. Take valuation as one example: many owners run their company to minimize tax, so the EBITDA they present is rarely the full picture. By working with them to identify the add-backs and establish the true numbers, I can secure a stronger outcome. 

After almost a decade, I founded Wayfinder Strategic Advisors. I wanted the freedom to work on my own terms and take on the clients and engagements a traditional bank might not.

Q. What usually prompts a founder to start thinking about an exit? 

It usually comes down to two scenarios. The first is a founder nearing retirement with no succession plan, where the exit becomes a necessity. The second is an owner who is still relatively young but has their net worth tied up in the business. They know an exit is coming eventually, so the focus shifts to the years in between. How much does the business need to grow to reach the value they want, and how do they fund that growth along the way? 

Then there are the exits no one plans for. A health scare, a partnership dispute, or an unsolicited offer that’s too good to pass up. Those situations are some of the most important ones to be prepared for, because when timing is forced on you, the last thing you want is to be caught flat-footed. 

Q. What drives the biggest valuation gaps between founders and buyers?

The gap almost always comes down to this: the founder is selling their life’s work, and the buyer is underwriting a financial investment. Those are two very different transactions happening at the same table. 

Founders see what the business represents: the years of sacrifice, the relationships built, and the legacy created. But an institutional buyer has a fund, investors, and a required rate of return. They are looking at EBITDA multiples, customer concentration, and defensible cash flow. 

They’re not cold people, but they are operating inside a financial framework that doesn’t have a line item for legacy. 

Going in, I’m direct about expectations. A lot of these buyers are going to operate the business from a spreadsheet, and if that doesn’t sit well with the founder, that type of buyer is probably not the right fit. They may pay the highest price, but if legacy matters, the answer might be to sell to employees, work with a strategic buyer, or reconsider whether they’re ready to exit at all.

Q. What are founders most often surprised by once they enter a sale process? 

Most founders picture a handshake and a wire transfer. What they don’t foresee is the mountain of diligence requests, the legal back and forth, the financial scrutiny, and jargon they’ve never encountered: quality of earnings adjustments, net working capital, and reps and warranties, to name a few. 

These concepts can blindside someone who has spent 20 years building a great business but has never been through a transaction. 

That’s exactly why sell-side preparation is so critical. I recently worked on a deal where another investment bank was running the process but hadn’t done any sell-side accounting due diligence. When it reached the quality of earnings stage, everything had to pause for six months as I cleaned the books and got things back on track. 

A delay like that erodes the seller’s leverage, on earnouts, post-purchase salaries, and the terms still on the table. 

Q. What determines whether a business attracts strong buyer interest? 

The businesses that attract the strongest interest are the ones that look like they were built to be sold, even if they weren’t. Most businesses are not as ready to sell as their owners think, and closing that gap is exactly where we spend our time. 

A strong management team is a huge draw for buyers. I’ve been in rooms where the team takes over the conversation and you can physically watch the buyer lean in. That isn’t something you can manufacture, but when it’s there, we make sure it’s front and center. 

From there, it’s about the financial story. GAAP compliant financials are table stakes, but what buyers really want is the detail underneath: margins by customer or service line, revenue concentration, and a forecast with real assumptions behind it. Getting all of that organized in a virtual data room before a buyer asks for it makes a real difference once the process starts moving.

Q. When a transaction stalls, what are the most common issues beyond valuation? 

The two other things we see stall deals are financial performance and legal negotiations. 

On the financial side, it’s usually one of two things. Either something unravels during diligence that wasn’t disclosed, or the company’s performance slips during the sale process, which is more common than people think. A deal can take 6-12 months and a lot can change in that time. 

Legal negotiations are underestimated by almost every founder, and the purchase agreement is about far more than price. It covers items like reps and warranties, indemnification, escrow, and earnouts, each of which can materially change what a seller walks away with. 

Net working capital is another key consideration, as it can trigger a significant price adjustment right at the finish line. Despite this, most owners haven’t even heard the term before we start working together. 

Q. How are today’s macroeconomic conditions affecting deal structures and buyer behavior? 

Rates have made financing more expensive, but the bigger shift is around risk mitigation. Buyers are pickier and underwriting more conservatively. When they do move, they want more protection in the structure. Earnouts, seller notes, and rollover equity are becoming increasingly common as buyers look to share risk and bridge valuation gaps. 

AI is also reshaping buyer behavior. Strategic buyers are using M&A to acquire AI capabilities, data, and infrastructure, rather than build internally. Accounting, legal, consulting, and engineering firms that have embedded AI into their delivery model are attracting premium interest, because buyers are acquiring the workflow and the talent, not just the revenue. 

Finally, there’s the tariff environment. Service businesses with recurring revenue and no import exposure are attractive right now, as they avoid that risk completely.

Q. How do you see the market for owner-led exits evolving over the next few years?  

The demographic tailwind is real. The wave of baby boomer owners approaching retirement with no succession plan will drive a surge in exits. Add the fact that private equity has been holding portfolio companies longer than usual, and you have a substantial buildup of assets that need to move. 

Larger private equity firms are already moving down market with buy-and-build strategies, outpricing the lower middle market players. Where you might normally expect a five or six times multiple, these firms will pay eight or nine. We’re already seeing that trend take shape.