5 M&A Myths and How to Deal with Them

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 800 words

The M&A myths that cost owners the most are about value and timing: that a business is worth what the owner needs, that a rule of thumb sets the price, that the highest price is the best offer, that buyers pay for potential, and that you can sell whenever you are ready. Each one sounds reasonable, and each one leads to decisions that lower the result.

Here is each myth, what is actually true, and what to do about it.

Myth 1: My business is worth what I need to retire

Owners often arrive at a price by working backward from their retirement plans or from what they have put into the company. Buyers care about neither. They pay for the cash flow the business will produce for them, adjusted for risk. For a profitable company with $3 million to $100 million in revenue, that most often means three to seven times adjusted EBITDA, where EBITDA is earnings before interest, taxes, depreciation and amortization, adjusted for owner-specific and one-time items. Where a company falls in that range depends on its size, growth, customer mix, management depth and records.

What to do: get an honest outside view before deciding to sell. If the gap between the number you need and the likely range is large, you have time to close it or to plan differently. Our answer on what you could realistically sell for today walks through the factors.

Myth 2: An industry rule of thumb sets the price

Rules of thumb, a multiple of revenue or of some trade measure, circulate in every industry. They are rough averages of very different companies and ignore what makes yours better or worse than average. Two companies with the same revenue can have very different profits, customer concentration and dependence on the owner. What to do: rely on a value built from your own recast earnings and from the kind of buyers likely to be interested. A formal business valuation is the rigorous version when you need one, for example for partners, lenders or estate planning. It also shows which buyers are likely to pay the most, since a strategic buyer, a private equity group and an individual may value the same company differently.

Myth 3: The highest price is the best offer

The headline price is only one term. An offer with a higher number may pay less at closing, hold back more in an earnout (part of the price paid later only if the business hits targets), require a large seller note, or come from a buyer whose financing is uncertain. A lower offer paid in cash at closing by a buyer with committed funds can leave you better off. What to do: compare offers on what you are likely to receive after tax and on how certain each is to close, with your advisor and CPA at the table. Ask each buyer how it will fund the purchase and how much of the price depends on events after closing.

Myth 4: Buyers will pay for the potential I see

Owners know where their company could grow: new territories, new services, better marketing. Buyers may agree, but they rarely pay in advance for growth they will have to deliver with their own money and effort. They pay mainly for results already achieved. What to do: where the growth is real and near, start it before the sale so it shows in the numbers, or present it as an opportunity that draws more buyers into the process, which is where extra price actually comes from. Documented plans, signed contracts or a pilot already under way carry far more weight with a buyer than an owner's description of what might be possible.

Myth 5: I can sell whenever I am ready

The best time to sell is while results are strong and rising, the owner still has energy, and buyers are active, not after a health scare, a lost customer or burnout forces the issue. A forced sale is a weaker sale, because buyers sense urgency and price it in. What to do: plan a year or two ahead, keep records sale-ready, and decide in advance what signals would tell you it is time. Our guide on when is the right time to sell your business covers those signals in detail. The owners who get the best results usually decided to sell well before they had to.

How MDR & Associates replaces myths with facts

MDR & Associates begins every relationship with a free, confidential discovery meeting and an opinion of value, a low-to-high range, based on three years of your financials. If the firm does not believe it can sell your company for maximum value, it says so and declines the engagement. For a quick, private starting point, try the valuation snapshot.

Where this fitsHow a business sale works, step by step →

Questions owners ask next

Do buyers use SDE or EBITDA to value a company?

For smaller owner-run businesses, buyers often look at seller's discretionary earnings, which adds back the owner's full pay and benefits. For companies with a management team, buyers usually use adjusted EBITDA. Your advisor will present the measure that suits your company and the buyers most likely to be interested.

If my price expectation is too high, should I wait to sell?

Perhaps, but with a plan. Waiting helps only if earnings grow or risks shrink in the meantime: a stronger management team, less customer concentration, cleaner records. Pre-exit work over twelve to twenty-four months focuses on exactly those changes. Waiting without changes mostly adds risk.