When to Sell Your Business: The Three Tests That Decide

Mark Herbick has bought and sold companies for three decades, first as an operator and now as an advisor on 40 to 50 transactions a year.

When to Sell Your Business Comes Down to Three Tests

If you run a talent solution that has been operating for five years or more, you are getting broker emails. Probably weekly. Most founders have no framework for answering them, so they either delete them or take a meeting they were never prepared for.

Mark Herbick gets the question constantly, and his answer is a framework. Deciding when to sell your business is not one judgment call. It is three separate tests, and all three have to clear.

Test one: is the business sale ready. At the basic level that means clean books and good practices. At the advanced level it means the business is growing, because a buyer is not paying for your history.

"A buyer is buying a business for what it is going to do for them, not what it's done for you." - Mark Herbick

Herbick has watched sales start declining the moment a process opens. One percent or twenty percent, the number does not matter. What the buyer sees is a trend line, and nobody wants to catch a falling knife. Flat is the worst case you can afford.

Test two: are market conditions favorable. Markets run buyer favorable, seller favorable, or neutral, and the swings last years rather than months. Cost of capital drives most of it. High rates compress multiples. But the macro read is only half the picture, because your industry can be sitting under its own weather system while everyone else enjoys the sunshine.

Business Exit Readiness Is the Test Nobody Trains For

The third test decides everything, and it has nothing to do with spreadsheets. Are you actually ready to get out?

Herbick has seen owners walk away from a signed LOI at the perfect valuation with every term they asked for. One client could not get through a single management meeting without crying. The deal died exactly the way the room expected it to.

The problem is that owner readiness gives you no usable warning. It arrives the way a turkey finishes cooking.

"The button hasn't popped yet. Man, three hours has gone by. The button hasn't popped yet. And then all of a sudden you turn your back and the button just suddenly popped." - Mark Herbick

What you get instead of a warning is ordinary noise. A bad day. A difficult customer. An employee issue. Indistinguishable from normal ownership until the morning you wake up and decide that was the last straw. Three straws earlier you had no idea the last one was coming.

Why M&A Due Diligence Got Slower, Not Rarer

The old rule was that M&A hates uncertainty, so deal volume falls when the world gets noisy. Herbick says that rule is dead. Tariffs, oil, geopolitics, AI reshaping whole business models, and deals keep closing anyway.

What changed is the depth of the examination.

"Uncertainty no longer stops M&A. Uncertainty increases the rigor of due diligence and negotiation." - Mark Herbick

Meanwhile the buyer side is hungrier than the headlines suggest. Corporate balance sheets are heavy with cash. Private equity has raised more capital than it can deploy. Strategics will buy fixer uppers because they know the space well enough to repair them. The binding constraint is not money. It is finding companies worth buying.

That deserves a sharper reading than "there are not enough good companies." There are plenty of good companies. There are very few companies a buyer can evaluate quickly enough to get comfortable. Herbick's own example makes the point: he is working a $100M business in New York City where 75% of the buyer pool disappeared before anyone opened the financials, purely because of where it sits.

Enterprise Value and Growth Are Different Formulas

Here is the line that should stop every founder reading this.

"There is a big difference between building enterprise value and growing a business. You have to know the difference in those formulas." - Mark Herbick

Most owners optimize revenue and profitability, then get blindsided by their multiple. Value drivers and growth drivers are not the same levers, and only one of them is what a buyer is actually pricing.

This is the version of the problem we built Human Cloud to solve, one layer down. Enterprise buyers are not short on talent solutions. There are more than 1,000 workforce platforms. They are short on solutions they can verify in minutes instead of months. The scarcity is legibility, not supply, and it is the same scarcity choking Herbick's buyer pool.

Which means the assets that make a solution acquirable and the assets that make it findable are the same assets. Verified case studies and third-party kudos are marketing collateral on Monday and due diligence artifacts on the day a buyer asks. Documented, accurate capabilities are how a buyer filters for you in a search and how an acquirer scopes what they are actually buying. A merit-based HC Score is an outside answer to "is this business any good," produced before anyone thinks to ask. Diligence got more rigorous, so the proof layer stopped being overhead and became the moat.

The growth test works the same way. Herbick's first question is whether the trend line is rising, and a pipeline that depends on referrals and $50K conference booths is exactly the kind that goes flat at the worst possible moment. A channel that runs on inbound buyer demand is what keeps the line pointed up while a process is open. And on his second test, whether the market is favorable, founders in this industry no longer have to guess. Demand by focus area is observable data now.

The Bottom Line

Herbick's advice to a room of owners at every stage, from one year out to ten, was identical: run the business as though you plan to exit shortly, and manage to enterprise value rather than revenue and profitability. Not because you should sell, but because once the button pops it is too late to build anything. You are selling what you already have.

For founders running talent solutions, that is unusually good news. The work of becoming acquirable is the same work as becoming discoverable, and it compounds either way. Build the proof, document the capabilities, get off referral dependence. Then the broker email in your inbox becomes a decision instead of a scramble.

---

About Mark Herbick

Mark Herbick is the Founder and CEO of Pursant, an M&A advisory firm working on 40 to 50 transactions a year, typically between $50M and $150M in enterprise value. He built and exited a national facility services platform and completed a dozen of his own transactions before founding the firm in 2010.

Listen to the full episode: Human Cloud Podcast on Spotify

---

This article was adapted from the Human Cloud Podcast. Subscribe wherever you get your podcasts.