Ask most business owners how sellable their company is, and you’ll often get a confident answer. They’ve built something real. They’ve got loyal customers, recurring revenue, and years of hard work behind them. Surely someone will want to buy it, right?
Unfortunately, the data tells a different story.
The harsh reality of the market
Across multiple studies and industry reports, the success rate for small and midsize businesses that “go to market” — meaning they’re formally listed for sale or represented by an advisor or intermediary to approach potential buyers — is startlingly low.
- The Exit Planning Institute (EPI) has long reported that 70–80% of companies that go to market never sell.
- According to the BizBuySell Insight Report, only about one in five small businesses listed for sale actually closes within a year.
- The Pepperdine Private Capital Markets Report (2024) found that for businesses valued under $10 million, only 20–30% of deals actually reach closing.
- The IBBA / M&A Source Market Pulse Report (2025) shows the same pattern:
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- Small businesses (valued <$2M) succeed only 20–25% of the time.
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- Lower middle market deals ($2–50M in value) have slightly better success (30-40%), but are still well below 50%.
Put simply, most small and mid-sized businesses that try to sell fail.
Why so many deals fail …
There’s no single reason, but a few themes emerge from the research. Too often, business owners fail to appreciate just how risky their business actually looks to a potential acquirer. Many companies are built around the owner’s relationships, know-how, or reputation — assets that can’t easily be transferred. Others are materially dependent upon one very significant customer or a particular vendor, risks that would-be acquirers will not assume. Many businesses haven’t sufficiently invested in and lack accurate, reliable and regular financial information, have poor documentation or have otherwise ignored or neglected significant areas of their business. The common denominator here is obvious — a failure to plan and prepare for an eventual exit. Your business may, of course, be a genuine diamond in the rough, but would-be acquirers don’t have the resources, patience or wherewithal to look for that diamond. Business owners don’t realize that potential buyers for their business are typically reviewing numerous other potential acquisition candidates at the same time. If you don’t anticipate their questions and the information that they’ll need/expect to review or otherwise make the diligence/investigatory process difficult for them, these buyers will simply move on to the next candidate.
The takeaway is simple: going to market without a plan and without preparation dramatically reduces your chances of a successful sale.
“Small & Mid-Cap” Businesses vs. “Large-Cap” Companies
“How is it that success rates are so low,” you might ask, “when I’m constantly reading in the news about a booming M&A market and hearing about a new blockbuster deal in the headlines almost every day.” That’s a great question. The simple answer is that larger businesses do in fact sell more successfully — and often much faster. Companies that generate more than ~$10mm in free cash flow or EBITDA annually tend to be more stable, less risky, have professional managers, excellent financial and operational reporting and controls, and continually reinvest their earnings back into the business. Given their ample planning, investment and preparation/sale readiness, these businesses are attractive and sought-after clients for investment banks and bankers.
The difference shows in the numbers:
- Deals represented by investment bankers close at roughly double the rate of those sold independently or through casual broker listings
- Professional preparation — audited financials, growth story, well-run process — consistently enhances both transaction certainty and value.
The “Preparation Premium”
This disparity is not surprising; in fact, it’s logical. These are businesses that were small at some point, but their owners knew the importance of planning and preparing. Larger businesses will always command a premium in a sale… that will not change. But you can still dramatically improve the likelihood of a successful sale of your business if you start early and give yourself time to implement essential changes.
A reality check worth heeding
For owners nearing retirement or thinking about an exit, the sobering truth is this:
The odds are not automatically in your favor.
But they can be — if you treat the sale of your business as the most important transaction of your life, not as a casual listing. There’s a real market out there for your business, but it rewards preparation, professional guidance, planning, realism, and embracing change.