Introduction
Roy: He joined a business brokerage firm in 1994 as a rookie sales associate. No clients, no reputation, no track record. Within six years, he was the top producer in Washington State. By 2000, the founder handed him the keys to the whole operation. Thirty-two years later, he’s personally closed over 300 transactions, with deals ranging from $500,000 neighborhood businesses to $30 million manufacturing operations, wineries, tech companies, and staffing firms. We’ve got someone who can really tell us how to up our game today. But first, let’s bring in the show.

What’s up, everybody? This is Roy Red, joined by Charles. What’s good, Charles?

Charles: I’m in the house today, and it’s kind of cool, because I get to flex my books the way Roy flexes his every single week. There are really cool things happening with Buy Build Exit and on the acquisition side of what Roy is doing. He’s helping a lot of people and having an impact, and that impact is getting larger every day. I’m really excited about our guest today because this is right up our alley. I’m just going to be soaking up all the wisdom.

Roy: I’m super excited too. We have a verbal deal going on a $1.5 million septic company. Deal Flow OS is growing. Every day I wake up to a notification that a few more people have joined. And we have the SBA loan limit increase, which we’re going to go live about after this. I’m super excited about that, because our range went from $1 million to $5 million up to $1 million to $10 million, as long as the real estate makes sense.

Today’s guest is the man you want representing you when it’s time to sell, or the man you want to study before you make an offer. We’ve got an M&A GOAT today. Gregory, how are you?

Greg: I am wonderful. Thank you for inviting me.

No Deal Is Better Than a Bad Deal
Roy: Gregory, I want to jump right into it. You have a line I want to start with: no deal is better than a bad deal. You told a seller to walk away from a buyer after months of negotiating, and they semi-reluctantly followed your advice. They came back to the market, found a better buyer, and closed at a superior price and terms. Walk me through exactly what you saw that told you to kill that deal, and what most sellers miss when they’re emotionally attached to getting out.

Greg: Great question, Roy. From a seller’s perspective, it’s a little different. Our clients are executing on their vision, doing what they enjoy, and making money. So if you level set, a seller is never damaged by continuing to hold their company. It’s different for a buyer trying to complete an acquisition. If the deal doesn’t feel right, the buyer has to keep searching the market for another opportunity. The seller goes back to what they’ve been doing, perhaps for decades.

So when we’re negotiating on the seller side, we want to make sure the deal feels right. About 70% of our clients are retirement sales. This is their exit rodeo. They’re riding off into the sunset, and many elements go into a sale. Everyone thinks about price and financial terms, but we like to drill into the other issues.

Take the employees. You may have worked in the trenches with them for decades. You saw them get married, raise kids, and prepare for retirement. You have to be concerned about them as well. If you’re in small-town America, the last thing you want is to walk into your favorite restaurant and get the stink eye from a former valued employee who says, “You did great on the sale. I was let go at 62. You knew I wanted to work until 65. What am I supposed to do until I’m ready to retire?”

You also have to consider parties beyond employees. There are customers who could be hurt if the business model changes, and suppliers who were part of your ecosystem. I sold a roofing company whose owner was loyal to one lumber yard for his roofing plywood. If the buyer moved purchases away from there, that supplier would be hurt.

There are many tentacles from any business out into the community. We like to pause and talk our clients through them. You may have someone who will pay top dollar, but we’ve all heard negative stories about private equity firms that merged a business in, closed it, and let people go. Is that really the legacy a founder wants at the end of the day?

How Buyers Compete With Private Equity
Roy: That’s an issue we’re dealing with right now. As a buyer, I want to make sure the employees are comfortable. But I’m not PE. I’m doing a rollup and buying smaller businesses strategically. In due diligence, shouldn’t the buyer also be thinking about which people to keep in place so that EBITDA doesn’t fall?

Greg: Great question. There are two sides to the equation. First, you have a competitive advantage over private equity if you’re local and going to be engaged in operations, even if you’re working on the business and building an infrastructure.

Second, in today’s world it’s often time for an evolution of the business using AI and other tools. I’ve had heritage owners who are intimidated by technology or don’t want to change, and that creates opportunities. At the end of the day, business is the ultimate competitive sport. If you don’t improve, you’re going to fail. You have to reset.

I watched the Spurs play the Thunder last night, and it was an amazing performance. But how many years did it take the Spurs to reset their organization and get back to this point? They’re not riding the same talent that won them championships. The same is true with family businesses. The person who was great in 1998 may not be the person willing to go all in and take the business where it needs to go in 2026.

From College Basketball Coach to Top Broker
Roy: So smart. You joined IBA in 1994 as a rookie with no book of business and became a top 10 salesperson within six years at a firm full of experienced brokers. What specific thing did you do differently that most new brokers don’t?

Greg: I’ll share a bit of my history that I believe has been foundational to my success, and then there’s a right-place-at-the-right-time element that helped me.

My first career was as a college basketball coach in the Jayhawk Conference in Kansas. I actually coached against Brad Underwood, who’s now at Illinois and took his team to the Final Four this year. He has lived the dream. But coaching at a junior college in Kansas, tell me what’s more intangible to sell than a JUCO education? I was out in the field selling myself and convincing people I was someone they wanted to work with. That helped me a lot when I entered business brokerage, because I was field-tested in selling myself and conveying confidence in my abilities.

I went to the University of Texas McCombs School of Business, and my degree is in investment finance and accounting. So I had that background, but the field experience selling intangibles was critical.

Then, if you recall the ’90s, I fell into an M&A environment selling ISPs, the old dial-up internet service providers. That was a big-fish-eats-small-fish marketplace. In anything, timing is critical, and putting those deals together let me achieve results at a young age.

The Most Common Reason Deals Fail
Roy: You’ve personally closed over 300 deals. What’s the single most common reason a deal that should have closed didn’t?

Greg: I would say disclosure of a material fact. We work really hard to create an environment of full disclosure in the sale of our businesses. As a buyer or investor, you should get all the facts upfront so you can evaluate the business. I like to make due diligence a verification process, not a discovery process.

Before we take an LOI, we want to give a buyer three to five years of tax returns, year-to-date financials, trailing 12-month financials, customer concentration, lease information, equipment information, an org chart, and so on, so that when negotiations happen, no one is surprised.

Here’s a very simple example of something coming out in due diligence. Say you have a drive-thru espresso business. You’ve been there 10 years making bank, and there’s a new strip mall going in across the street with a Starbucks on the end cap. That will hurt the business. If you don’t disclose it to a buyer who is relying on your financials, and they find out, they may walk away. Worse, if you knew about it and didn’t disclose it, you could end up in a lawsuit after closing.

The Early Years
Roy: You went to the University of Texas at Austin, majored in investment finance, and came back to the Pacific Northwest in 1994 looking for a career change. At your father’s recommendation, you walked into a business brokerage meeting, because your father had sold his veterinary practice through IBA in 1983. Now you’re running that same firm 32 years later. What’s the version of that story you don’t tell in the polished pitch deck?

Greg: Great question. I would say that with a young family, it was hard to be in a 100% commission business. You don’t know where your money is coming from. I rose quickly as a salesperson and did well. But my wife loves to tell this story: there were times we would load up a pickup truck and deliver phone books to make rent. They paid you by the truckload, and you could do it anytime you wanted. So we would work Saturdays and Sundays and do several truckloads to create family cash flow beyond her salary, because it can be six months between paychecks when you’re getting started.

My best year, I did 19 sales in a calendar year. But on average, my brokers do four to eight a year. You may get six figures in one check, but it’s tough when you’re waiting five months to get paid again and watching that balance dwindle.

Roy: That’s huge. I tell people the sales cycle is long in M&A. I’m still talking to sellers from a year or two ago who are reaching back out saying they might be ready soon. That’s just how it goes.

Lessons From the Great Recession and COVID
Roy: Greg, IBA has been around since 1975. You’ve watched the Pacific Northwest M&A market through multiple recessions, interest rate cycles, post-COVID chaos, and now AI. Give me the one market cycle that changed how you think about deal timing forever.

Greg: Owning the firm during the Great Recession was highly educational for me. I had 15 brokers in the field selling businesses in 2009. By 2012, I had six, including myself, because they couldn’t support their families. Some retired, and some went on to do other things. Only one broker from that time is still at my firm. I have 20 brokers now.

What it taught me, and we all know this from a business perspective, is that cycles happen and markets come back. So during COVID, I researched the Spanish flu. It took America about two years to come back from it. So I doubled down on brand awareness marketing in a way I hadn’t during the Great Recession, so that as the economy came back, IBA was the omnipresent brokerage option after the pandemic.

It was about having faith and the ability to put chips on the table. You have to ante up and stay in the game as a business person. Experienced people don’t worry as much about cycles. Look at Steve Jobs. He was wealthy, and he was fired by Apple. He came back with the iPod and the iPhone and took Apple to historic heights. Where would it be if he’d given up and left the industry when he was fired?

Interestingly enough, I was reading that he was an early investor in Pixar when it was struggling, but he saw the potential of digital animation, and after Toy Story came out the company skyrocketed. He had vision in a space people don’t know much about. Again, are you willing to push the chips in as an entrepreneur and say, “Yes, I took this money out, but I’ll put 70% of my net worth back in”?

Roy: I actually got to sit in his office at Pixar. After he got kicked out of Apple, Pixar saved Disney when they partnered on films like Monsters, Inc. Then Apple brought him back and he blew Apple up again. That transition in his life will be an epic movie one day. I hope someone makes it.

Why Business Brokerage, and Why IBA
Roy: Greg, take me back to 1994. You returned to the Pacific Northwest from the Midwest, ready for a career change. You had a finance degree from UT Austin, and you had options. Why business brokerage, and specifically why IBA over everything else available to you at the time?

Greg: Great question. I’m a Northwest boy. I left coaching ready for a change and came back to visit my folks, and I didn’t know what the next chapter was. I was running the pro shop at a local tennis club to pay my bills, because I’d been a tennis player growing up. My father said to me, “You’re a salesman by personality. You’ve got an accounting and finance background. I think you’d be good at selling businesses.” So he introduced me to the founder of IBA.

Again, coaching benefited me. As a coach, you’re judged on winning and losing. So transitioning to 100% paid-on-performance brokerage wasn’t a different metric. At the college level, if you don’t produce as a basketball coach, you’re done.

Roy: I always tell people there’s no such thing as wasted experience. What you were doing before business brokerage helped you succeed in it.

Building a Referral Network
Roy: In your first six years, you went from rookie to top 10 salesperson to managing broker for Washington State. What did years one and two actually look like? Where did your first clients come from, and what did you do wrong before you figured it out?

Greg: Business brokerage is a business you really have to do to learn. What I tell the brokers I mentor is that a small deal will teach you as much as a big deal and prepare you for future success. My first deal was a drive-thru espresso stand called One for the Road. It was referred to me by a family friend who knew the owner wanted to sell, and that transaction gave me field experience.

A lot of your early years are networking, business development, and getting known. I was part of a group called LeTip, a lead generation group where members pass leads to each other. It was just about getting out there and meeting people. The key in business brokerage is building an ecosystem of referrals. Our power partners are attorneys, CPAs, bankers, and wealth advisors. Anytime someone makes a referral, it reflects on them if the person underperforms. So it takes time to become someone people know, like, and trust.

My first six years were about building that ecosystem and network. To this day, I get referrals from that early network, from CPA firms and law firms that have known me for 32 years. For some of them, IBA is their only referral partner in this space, because we have the track record.

Roy: We’re in a trust recession. I actually have a tactic I call a referral party, where I throw a small party with friends and business contacts.

Taking Over the Firm
Roy: Bill Osavski approached you in 2000 about handing over the firm. You were 32 or 33 at the time, taking over a 25-year-old institution. What was that conversation like, and what was the moment you decided you were going to say yes?

Greg: Wonderful question. The first thing Bill recognized is that I had no non-compete. I could leave and start my own firm. I had fire in my belly, and that was a possibility, so that was my leverage on the table.

Part of his motivation was his team of brokers. They were older at that stage, approaching retirement, with kids in college, and he didn’t want to abandon them, because they had been good to him over the years. Many of them had mentored me, and they liked me. So he leaned into an internal sale, partly to support me as a favorite son and keep me with the brand, partly to preserve his legacy of having his company continue in the region, and partly to avoid disrupting the world of the people who had been loyal to him for years.

Roy: So he was looking to exit, and he wanted to transition safely.

Greg: Exactly. I’m a golden rule person in any situation. It’s one reason I’m successful as a negotiator. I make the parties virtually get up from the table, walk to the other side, and look at the deal from the other perspective. You should be willing to do a fair deal whether you’re on the buyer side or the seller side.

Bill also knew I would be fair with him, and he would be fair with me, on how compensation for the transaction would work. And I was blessed. He put a significant portion of the transaction in an earnout, where he was betting on me like a racehorse, and he did very well at the end of the day.

Roy: I think that’s a tremendous opportunity that gets overlooked. If you’re an employee of a company where the owner is getting older, and you work hard and bring value, they can pass it on to you. If they trust you, you can get a good deal with a seller note.

Greg: It’s always about balancing risk. There’s no risk in cash for a seller, but there’s a lot of risk for the buyer, because things can change during a transition of ownership. You lose a key employee, you lose a key customer, COVID happens. All sorts of things can happen. Five years ago, who would have worried about owning a community favorite restaurant in Malibu? You thought you had great demographics. People were always lined up out the door. Who plans for a fire?

Why Legacy Matters to Sellers
Roy: Your father introduced you to IBA after he sold his veterinary practice, and he spoke very highly of the firm. What is it about that experience, a business owner selling the thing they built, that creates that kind of loyalty?

Greg: I think it’s creating an environment of full disclosure, so executive decisions can be made from a position of knowledge, and getting buy-in, for example from the CPA, that the value being delivered by the market is fair. This is your life’s work.

My father was the veterinarian for Bill Walton and Maurice Lucas, who played for the Trail Blazers. He was the veterinarian for the Portland Police Department. He had a very nice practice. He was even on local TV once a week as the veterinary consultant on an “Ask the Vet” segment, where he’d spend 15 minutes talking about pet care. So he had a fairly high-profile practice, and his legacy was important to him.

As I touched on earlier, money is important, but people care about their credibility in the community, and they don’t want to damage it. They may be funding the local theater or have their name on a local ballpark because they’ve given money back.

I probably talk basketball too much, but it’s my background. Here in Seattle, Howard Schultz has a horrible reputation because of what he did with our Sonics. He has more money than God. But I can tell you, even with the corporate headquarters here, the man on the street does not love him.

How to Systematically Build Deal Flow
Roy: IBA is a referral-driven business. Most of your clients come from past clients, attorneys, accountants, and bankers, and you didn’t build that network overnight. Walk me through how you systematically built the professional relationships that fill your pipeline, and what operators who want deal flow should be modeling from you.

Greg: You have to do your legwork. That means going to coffee and lunch with different people and getting known. Also, givers gain. We might be doing a transaction where the buyer is leaving the corporate world and doesn’t have an attorney, a CPA, or a banker. So we refer clients to those professionals, and a reciprocal relationship is built. You can’t expect people to just refer you. You have to make it an ecosystem.

Roy, you touched on this. We do collaborative partner events. We’re actually doing one tomorrow. I rented a local 21-and-over movie theater with a bar, and in honor of the World Cup, we’re showing a movie about Pelé’s youth. We’re doing two showings. The first group of collaborative partners gets a 75-minute happy hour and then goes into the movie. Then the next group comes in for a 75-minute happy hour with my team and goes into the movie.

I like to make it fun and rewarding to engage with IBA, and people remember that when they have referrals. They think, “I want to be invited to IBA’s next party, so I’d better refer them. This other firm hasn’t even said thank you for my last referral.”

Those simple things make a difference. All of our moms taught us to say thank you. When you went to another kid’s house for a sleepover, you wanted to be polite. Simple things like that make a difference in the business world. I’m blessed to have had good parents who taught me manners, and I still want to apply them professionally.

Roy: There’s a lot of wisdom there. I like the idea of adding value before you seek to extract value. Givers gain. I love that.

The IBA Blog and Vetting Buyers
Charles: You wrote your first article on the IBA blog in September 2024, and you’ve published over 150 pieces since. Most business brokers don’t write publicly. What made you decide content and thought leadership were worth the time, and what has it done for your business?

Greg: Well, I will correct you, Charles. We launched our blog in 2014, so add a decade. I’ve written over 400 articles personally, and we’ve had about 200 guest authors.

Part of our thinking was to promote our collaborative network to the readership of our blog, which is about a thousand readers a week. My mother was a schoolteacher, and I’ve talked about education. There’s also a selfish piece. If a buyer asks me a question and I can give them an article as a foundation before we talk, it moves them forward from an education standpoint. We’re not always the best resource for all that information, but as I said, I believe the best deals are done from a position of knowledge on both sides.

For example, when a buyer reaches out to us, we vet them financially before we introduce them to our client. Some people push back, but in our experience, the people who won’t be transparent are bluffing about what they can do.

There are elements in a financial statement or balance sheet we need to see, such as their liquid cash. We know what you can get with an SBA loan, and I’m happy to talk about SBA loans with you. But if a buyer is going to inject, say, 10% of the purchase price and ask the seller to carry 10%, we can multiply their cash by what the bank will require in debt service coverage to support the loan. That lets us calculate the ceiling for their good-faith negotiations in a standard deal. Most of our deals have a buyer injection of 10% to 20% of the capital in liquid funds. Then we start problem solving with the seller using earnouts, retained equity, and SBA and conventional loans. A lot can be learned just from how much liquid cash a buyer has.

We also want to know their net worth, because the majority of businesses in metro areas are in leased facilities, and the landlord has to approve the transfer. If you’ve dealt with landlords recently, more and more commercial buildings are owned by private equity firms and REITs. They don’t care about the deal. They care about protecting their investment. If we don’t deliver a buyer with sufficient signature power, our retiring owner may have to stay on the lease, possibly for a 10-year term to satisfy an SBA loan. That’s not popular with a 74-year-old who is retiring and financially planning for their next chapter. Do they really want to guarantee a lease for someone they met 15 minutes ago?

Roy: That’s a good point.

Building a Public Brand
Roy: You’ve been published in industry trade journals and spoken at seminars for government entities, the legal community, and the banking community. You built a public brand in a field that’s typically low-profile. Was that intentional from day one, or did you evolve into it?

Greg: I evolved into it. With the blog, I like writing. Writing is a happy place for me. I like sharing my thoughts, and it’s intellectually stimulating. I’ve also always been comfortable with public speaking.

So it evolved over time as I was asked to share information. The SBA frequently taps me at their banker training conferences to present on what’s happening in the field, so bankers know the multiples and terms being negotiated. I just spoke to the ETA program at the University of Washington Foster School of Business. Again, I like to set buyers and sellers up for success. If you have a foundation, like the book you wrote, it gives people a great starting point. You wouldn’t try to make a dish you’ve never made before without following a recipe.

Book Smart vs. Street Smart
Roy: You have a BBA in investment finance. I have a finance degree as well. You’ve spent 32 years brokering businesses, from manufacturing plants to cannabis companies to wineries. Looking back, what did your formal education actually prepare you for, and what did you have to learn in the field?

Greg: Probably like you, it gave me accounting and finance knowledge. I actually had this conversation with my son. He started as a finance major and ended up as a marketing major, which is fine. He graduated. But I believe finance and accounting are the vegetables in the meal of being a business owner, and you need them. You can be a rainmaker, but if you don’t watch your pennies and dimes, you’re destined for failure. So that was very beneficial to me.

But book smart and street smart are two different things. You need to be out in the field learning things firsthand to really know what works.

Roy: I agree 100%. I’ve seen so many people who became successful in business, and when you ask what they majored in, it was accounting or finance.

What Makes a $2 Million EBITDA Business Sellable
Roy: Let’s get tactical. Your deal range is $500,000 to $30 million. I’m in the $1 million to $5 million range, maybe $1 million to $10 million after these SBA changes: service-based businesses in the lower middle market. You’ve worked in that range for 32 years. What does a legitimately sellable $2 million EBITDA business look like in your market today, and what makes an otherwise identical business unsellable?

Greg: We frequently sell businesses at EBITDA multiples of two to seven. That’s where the bulk of our transactions are.

You both know this, but your audience may not: multiples are the reciprocal of return on investment and risk. A four multiple means an investment with a 25% return on investment. A five multiple means a 20% return. If you look at the spectrum of investments, you start with CDs and bonds, move to real estate, then mutual funds, large-cap stocks, small-cap stocks, and then you get to where we live.

It all comes down to risk profile. Is there customer concentration risk? Owner concentration risk? Competitive risk? SaaS companies used to be seen as gold, but right now they’re battered in the market, because people think AI will offer replacements for many of those subscription models. They used to sell at high premiums for their recurring revenue, and today they’re beaten up.

How Valuation Gaps Happen
Roy: Let’s talk about valuation. You’ve had sellers come to you after getting a competing valuation they didn’t like, and your number came in a million dollars higher. How does that happen? How does one broker see $4 million and another see $5 million in the same business?

Greg: Let’s talk about our industry a little, because this may help people interested in buying. There are two basic business models in this business. There’s IBA’s model, which is very clean: 100% paid on performance. We don’t collect a penny from our clients until the deal closes. The alternative is to charge retainers and administrative fees upfront.

When firms do that, I think they’re often deferring the hard conversation about valuation and leaving the heavy lifting to the buyer. If a seller pays $50,000 to get the sale process started and the broker delivers a number they like, they’re happy on day one, but they may get no offers in a year. Many times we have sold businesses where someone paid a lot of money upfront, never got offers, and then came to us.

What I tell people is: I do this full time. I’ve been doing it for 32 years. I’m paid 100% on performance. And the situation is often the opposite of what you describe. We frequently come in at a lower value. I’d rather take my two hounds for a walk with my wife than work on a project that isn’t going to sell. If you’re not going to trust me on valuation, we’re not going to go to work for you. We want to convey that we come from a place of honesty and have no self-interest in delivering a price out of alignment with the market.

But I’ll add two things. First, I use the analogy of a ladder. Our goal in pricing a business is to walk buyers up to the top rung. We know we have to justify that price to the buyer, their CPA, their CFO, their attorney, their bank, and their investors. There’s no dumb money in the market, but we want to price the business to create a competitive marketplace. One of my brokers, Andrea Lines, just sold an online education platform for $500,000 more than we were asking, because she created a competitive marketplace and buyers competed for it, pushing the price higher.

So with our market knowledge, we can sometimes price higher than other firms, even ones with the same business model, because we may know more about the dynamics of the marketplace. If you don’t know where the fish are biting and what they’re biting on, how are you pricing it?

Second, here’s an example from my territory. I have 10 offices spread across Oregon and Washington. Washington has no state income tax. Oregon has one. We could have identical companies, say $10 million in revenue and $1 million in EBITDA, 10% to the bottom line. The owner in Washington nets more than the owner in Oregon because there’s no state income tax layer. Logically, that business should sell for more, even with everything else nearly identical. If the owner is netting 5% to 8% more, why wouldn’t that investment be worth more?

Roy: That makes total sense.

When to Tell a Client to Wait
Roy: You told a client to wait a full year before going to market, even though you could have listed them immediately. Revenue was still growing, and you left the commission on the table. Walk us through the math and reasoning behind telling someone not to sell. Most brokers would have just taken the listing because they want to make money.

Greg: First of all, it’s the golden rule: what’s best for the client. If they were my uncle or aunt, what advice would I give them? That’s the metric I want to use.

Second, there may be things that can be improved in the operation. Very simply, say a husband and wife team runs the company and the wife is the CFO. Replacing two people in a sale is harder than replacing one. If she can train her replacement and exit, the sale will be easier, because you’re not losing the top of the accounting department at the time of sale and having to replace two people.

Or maybe you have a key customer whose contract is up in August. Maybe you use your goodwill to negotiate an extension with that customer before we sell, so you can say as a manufacturer, “I have a three-year contract in place with Boeing to manufacture this component.” That’s an asset that increases value, versus the risk of losing Boeing as a customer in four months.

Marketing a Business Confidentially
Roy: You’ve called confidentiality your solemn pledge: no one outside a potential transaction will learn the business is for sale without the owner’s permission. In practice, how do you market a business to potential buyers without employees, suppliers, and customers finding out?

Greg: The reality is that if a sale becomes public, it can damage the business. You could lose employees, customers, vendors, and so on. So it’s in the buyer’s best interest to keep the sale confidential as well. We have an NDA process, and we vet buyers financially, as I shared. It’s really about getting in front of qualified buyers who will negotiate in good faith.

It’s difficult, because as in any sale, you want the maximum number of people exposed to the opportunity. Market competition is good. But at the same time, word travels, and it can be innocent. Someone has a few too many beers at a barbecue, they’re excited about the business they’re negotiating for, and they tell their best friend. It turns out their best friend’s sister-in-law works at that company, and they didn’t even know her. Now does the friend tell his sister-in-law her company is in play?

Roy: Huge. I ran into something like that today, actually.

The Due Diligence Checklist
Roy: You wrote about Musk’s Twitter acquisition as a $44 billion case study in due diligence and disclosure. The principle you pulled out was that buyers deserve a foundation of accurate information, from customer concentration to deferred capex to pending retirements of key employees. Build me the actual due diligence checklist. What are the top five things that kill deals when they surface late?

Greg: Table stakes is tax returns. They’re the most important document in a sale, because you’re accountable to an outside party for their accuracy. A person could potentially go to jail for not reporting accurately. I would never close a deal without reviewing tax returns. If you’re selling in Q1 or Q2 of a new year, as a buyer I would actually require the tax return to be filed as a condition of sale. If you’re buying in February, there’s no reason the seller can’t file that return in February and have that information in place. I don’t like sellers being on extension when we’re trying to sell. You need to get your ducks in a row and be ready to sell.

Customer concentration is a big one. You need to know whether any key customers exist.

Key employees are another. Could your key salesperson go to a competitor because they don’t like the sale? Maybe they’re even recruited by that competitor, cash in for more money themselves, and leave, taking customers with them.

I would also say follow the money. I always say to reconcile bank statements against the financials.

The last one is to look at trailing 12 months. We’re in May right now, so 2025 data is 150 days old. If you’re not looking at where the business stands from June to May, I think you’re being negligent, because something could have changed. Maybe cost of goods went up. Maybe your municipality changed the minimum wage. Maybe new fuel prices are the new normal. That hurts a pizza delivery business, or an HVAC company with a lot of people on the road, much more than a virtual company that isn’t driving.

Handling a Seller Meltdown
Roy: You’ve said that selling a business can be very emotional and that you need a steady captain at the rudder. What does a seller meltdown actually look like at the deal table, and what do you do when a seller is about to blow up a transaction because they’re emotionally compromised?

Greg: The seller’s position is really hard, because in addition to selling the business, they still have their day job running the company. It’s taxing on all sellers. You have to recognize that, be patient as a broker, and make sure they’re getting enough knowledge. Anyone who’s stressed and in unfamiliar territory can panic, and their personality changes. So you need to be a bit of a psychiatrist walking them through the situation.

But as we talked about earlier, you also have to be able to be honest. If negotiations are going poorly, or it’s not a good-faith negotiation, you need to give them appropriate counsel, because maybe they’re not being irrational. But if they are, you try to slow things down.

We often return to why they’re selling. It can take a seller more than a year to exit once you add the transition period after the sale. If they’re retirement age, you go back and say, “Look, we started this because you wanted to retire. What is freedom worth to you?”

Yes, the buyer found something in due diligence, and it’s legitimate. Maybe it’s a $50,000 adjustment multiplied by five. That’s a quarter million, which is a real number, and the seller can be angry, because they thought they were getting that higher value. But going back to market, finding another buyer, and potentially ending up in the same place: what is having access to that money six months to a year sooner worth to you? So I have that discussion. What’s more important, freedom or money? We can wait for the money. You’re not damaged by continuing to own the business.

But I’ll also say that if something is discovered, I have a responsibility to share it with all buyers, and they may reach the same conclusion on valuation as this buyer. The first buyer just happens to be the one who delivers the gut punch. I assume you’ve been in situations where no one wants to be the messenger of bad news.

Roy: Except my CFO. He doesn’t mind. He enjoys it.

Why Seller Financing Protects Buyers
Roy: Greg, when does seller financing show up in your deals, and how do you position it with sellers who don’t want to carry paper?

Greg: I want to compliment you both. Your questions are excellent.

I’m an advocate for seller financing from the buyer’s side, because it addresses trailing liability. It’s an enforcement mechanism to make sure the seller provides the transition training and consulting they promised and honors the non-compete. If I were buying a business, I would have either seller financing or an escrow holdback 100% of the time. I think it’s foolish for a buyer to buy a business without that element.

It’s up to the broker to educate the seller on why it’s reasonable. We’re working with a drywall company right now. Say you do the drywall in a new office building, and you’re rushed. It’s heading into Memorial Day weekend, you don’t do your best work, and it’s discovered after the sale closes on June 1. The buyer shouldn’t be damaged. You were paid for that work. The seller needs to take responsibility for what happened while they were at the helm. Seller financing or an escrow holdback gives the buyer financial leverage to hold the seller accountable. What occurred while the seller owned the company is theirs. They got the profit, but they also have the responsibility.

Buyer Brokers and Representing Buyers
Roy: You represent sellers, not buyers. That’s your stated lane, but you’ve also represented individuals and corporations as buyers on a consulting basis. Where does the buyer broker model break down, and what should a buyer do when they’re on the other side of an IBA-represented seller?

Greg: That’s a lot. We welcome buyer brokers into our transactions. But we find that most buyers don’t need a broker, because they’re represented by their attorney, CPA, and so on. Entrepreneurs also want control of their own negotiations. They don’t want to delegate it. And there’s basic communication: it’s easier to have one cook in the kitchen facilitating it.

So I actually think one broker has a higher probability of completing a transaction, as long as that broker has integrity and uses best practices. At least with our business model, the broker has the same incentive as the buyer to get the deal done, and the seller obviously hired them to do that. Everyone is in the same boat. I love when agreement is reached on a letter of intent, because at that point, if it’s a comprehensive LOI, everyone at the table (the buyer, the seller, and the broker) moves from confrontation to collaboration in pursuit of the same objective. We should all communicate and work together to find ways to achieve everyone’s stated goals. That’s always been my philosophy.

We do periodically represent buyers, and we’re very specific about it. We only represent buyers who have already identified a specific target acquisition. We don’t want to find them a business. That gets to the core of IBA’s business model: we want to represent the commodity. For us, it’s not if we get paid, but when, and we sell 80% to 90% of our engagements. A buyer can pass on everything, and it’s not a productive use of our time, energy, and resources.

You’re experienced buyers, and you’re a delight to work with. First-time buyers need a lot of handholding, and we have to vet them. Are they the best buyer? Sometimes a person needs to lose a deal or two before they realize the buyer is not in control. Generally, it’s a seller’s market. The seller can take their marbles and go home, and the buyer is left out in the cold.

That’s why I don’t like representing buyers. They often come in with an overstated sense of their net worth. Often these are people of financial means who are used to getting their way, and they’re not happy when they’re not in control of the dynamic.

Industries to Approach With Caution
Roy: Your firm handles manufacturing, distribution, tech, marine, automotive, education, cannabis, wineries, hospitality, staffing, and construction, almost every vertical. Are there industries you’ve learned to be more cautious about from a deal-closing standpoint, and what makes those sectors hard to transact?

Greg: We represent about 20 different industries. One thing unique about IBA is that I have brokers who specialize by industry. Rather than having generalists, I believe market knowledge is valuable. Whether it’s auto repair, education, or cannabis, you want someone who has done deals in that space. With cannabis, for example, have you navigated the license transfer, which can be very complicated depending on the state? Do you know how to navigate that swamp and get to closing? It can mean months of difference in closing if you know how to complete the paperwork and who to reach out to in state government to move the file forward. Industry knowledge matters.

As for industries to be cautious about, same as you, we look at industries that may be in turbulence. I was just talking to one of my brokers, Grace Chang, who is working with a chain of fried chicken restaurants that wants to sell. Part of our discussion is that it’s a really noisy space right now, with a lot of businesses in expansion mode, like Chick-fil-A and Dave’s Hot Chicken. Where is this business going to fit in that landscape moving forward?

There are winners and losers in hamburgers too. In Seattle, Dick’s Drive-In is iconic. It’s a local hamburger joint that has competed for decades with McDonald’s, Burger King, and others. But it’s not easy to compete in hamburgers. Some chains that came to Seattle weren’t successful. I remember Teddy’s Bigger Burgers, a franchised Hawaiian chain, opened two stores in Seattle and failed because they couldn’t gain traction against the businesses already in the market.

You also have to look at trends. I’ll stay with food because people know it, and you can probably relate. When I was growing up, Baskin-Robbins was the ice cream place we all wanted to go to. Then it became TCBY, The Country’s Best Yogurt, and Baskin-Robbins was less popular. Then it cycled back to mix-in ice cream chains like Cold Stone Creamery. With my kids, it was Menchie’s and Yogurtland. Now in Seattle, it’s Molly Moon’s and Salt & Straw and more craft ice cream. So do you want to be in frozen desserts when a concept is getting hot, or when it’s declining in popularity?

In food service, I’ve always polled my kids and their friends and watched where they want to go. When I was growing up, after football games, the whole school was at the McDonald’s parking lot. My kids and their friends don’t want to go to McDonald’s. They go to Panera and Chipotle. You have to be aware of these trends, because they change in real time, and you don’t want to be the one holding the bag.

Rapid Fire
Roy: All right, Greg, we have rapid-fire questions. One sentence, no explanations. Are you ready?

Greg: Shoot.

Roy: Buy the business yourself or use an intermediary: which creates better outcomes for a first-time buyer?

Greg: Intermediary.

Roy: SBA or seller financing: which one saves more deals?

Greg: SBA.

Roy: Biggest red flag in a seller’s financials?

Greg: Customer concentration.

Roy: Most overvalued industry in the Pacific Northwest right now?

Greg: Trades.

Roy: Trades. Okay. Best industry to buy in 2026 that nobody’s talking about yet?

Greg: Anything that can take advantage of automation or AI.

Roy: Asset sale or stock sale: which do buyers prefer, and why?

Greg: Asset. You gain depreciation, amortization, and tax benefits.

Roy: One thing sellers do that guarantees they leave money on the table?

Greg: That’s a really tough question off the top of my head. Pass. Can I come back to that?

Roy: We’ll come back to it. Best book to hand a first-time business buyer before they sign an LOI?

Greg: I would say Shoe Dog.

Roy: I’m going to grab that. Earnouts: necessary, evil, or deal killer?

Greg: I’m going to answer that one with more than one word. They’re very valuable for dealing with variance in a company’s performance. For example, say a company had its best year ever last year, but the previous three years were fairly stable. An earnout is a problem-solving approach where the seller can get full value if the new level is the new normal, but the buyer is protected if performance reverts to the mean. We’ve all seen professional athletes sign big contracts after banner years and never justify the money.

Roy: Minimum EBITDA you tell a buyer to accept before considering an acquisition?

Greg: We start at about a quarter million. You want a business where people can work on the business, not in it. We pass on businesses that are all about the owner.

I sold a florist shop many years ago. It had the most amazing owner you’ve ever seen, a phenomenal whirlwind of a Vietnamese woman who made the most beautiful arrangements in record time. The financials were incredible, but she was 2.5 full-time employees to replace. So in selling it, we disclosed: “Don’t just look at the financials. Talk to this owner about what she does. Maybe spend a day with her, because you’re not going to replace her with fewer than two people.”

Roy: That’s crazy. One word: what kills more deals than anything else at the finish line?

Greg: Dishonesty.

Roy: There it is.

Where to Find Greg
Roy: All right, Gregory, where can Buy Build Exit listeners find you, connect with you, and come into your world?

Greg: I would start with our website, ibainc.com. We have one of the most comprehensive websites in the industry, and I would point people to two parts of it.

First, our blog, which we talked about briefly. It has a library on virtually every topic you’d ever want to explore. For example, an SBA banker just wrote an article for us on new programs to encourage investment in domestic food production that haven’t necessarily reached the public domain yet.

Second, our video page, where, Charles and Roy, you’ll be featured in the future. It has past podcast appearances by my team and me where you can gain the knowledge we’ve shared.

Roy: There it is. Charles, do you want to chime in before we close out?

Charles: What I like about this conversation, and about you, Mr. Kovsky, is that you understand the science behind business acquisitions, but you also understand the science behind business in general. When you spend your time analyzing businesses in order to sell them, I’m sure you gain a lot of insight into business itself. Just hearing you talk about how you run your firm, there are a lot of things I identified that are right on point. There are multiple levels of excellence and expertise here and a lot of value in this conversation. I appreciate you coming on and sitting with us for the time we had you.

Greg: Thank you. As I said, you asked great questions. You got to the meat and potatoes, and that’s what people need to set them up for success. Hopefully our conversation will spark areas of thought and research, because it’s risky to buy a business. The rewards are ample, but you need to be prepared to buckle up. To me, business is the ultimate competitive sport, and it’s unforgiving. If you’re not performing, you’re going to be done.

Roy: There it is. Business is the ultimate competition. We hope you enjoyed this episode as much as we enjoyed making it for you. Comment, share it with someone, and subscribe if you haven’t already. We’ll put all of Gregory’s contact information in the links. Until next time. Peace.