MarketView Insights: Navigating Macroeconomic Headwinds

Over 50% of attempted business sales and capital-raising transactions end in failure.

Why?

Because business owners haven’t prepared their businesses, or themselves, for the complex realities of the process.

This monthly newsletter is dedicated to providing you with the objective, practical insights needed to change that statistic for the better. We'll show you the strategies and tools that empower owners to take control of their future.

Whether you’re a business owner considering your next chapter or a trusted advisor guiding clients, you know that selling a business is one of the most significant transactions of a lifetime. Yet, many owners enter this process stressed and unprepared, leaving their most valuable asset to chance.

Let’s start with a case study:

Frank and Sons, Inc: Navigating a Family’s Legacy Under Threat

Frank & Sons, Inc., an 80-year-old family manufacturing business, was a cornerstone of its community. The owner, Robert, had planned to pass the business to his son and daughter, Robert Jr. and Mary, but at the time he chose, a perfect storm of macroeconomic forces had battered the company.

Tariffs: New tariffs on imported raw materials dramatically increased the cost of goods sold, shrinking margins from 18% to just 12%.
Interest Rates: High interest rates made it difficult to finance a necessary capital expenditure for a key piece of machinery.
Inflation: Inflation was eroding the value of the family’s profit and putting pressure on the company to increase wages for its 120 employees, or risk losing them to a competitor.

On the surface, Robert's business still looked profitable, with revenue holding steady at around $22 million. But his heirs, Robert Jr. and Mary, were deeply worried. Their parents were counting on the business to fund their retirement, but they had real concerns about carrying on the legacy in such a hostile economic environment. The thought of selling was filled with emotional stress, with the family divided over whether to sell now or hold on and risk the family's legacy. The family was stuck, feeling immense anxiety, and our MarketView Blueprint was the first step toward getting unstuck.

The Core Problem: A Business Facing an Existential Threat

Frank and Son’s MarketView Blueprint revealed that the business was not just facing external threats, but also internal issues that would significantly diminish its value and prevent the family from receiving a fair price.

Emotional and Family Conflicts: The family was deeply divided over the decision to sell or hold. Robert Sr. was emotionally attached to his father's legacy, while his son and daughter were paralyzed with fear and anxiety. They couldn’t come to a consensus, and their internal conflicts prevented them from objective decision making.
Lack of a Documented Growth Plan: The business had no clear plan to grow its top line and profits, and this was particularly challenging in light of higher cost of goods.
No Post-Exit Plan: Robert and his wife had no clear plan for what they would do after selling the business. They had not articulated their financial needs and Robert had no idea how he would spend his time after exiting the business. This created stress that led to uncertainty for them and the rest of the family,
An Aging Employee Base: The average age of the 120 employees was 55, with many nearing retirement. While this signified loyalty, a buyer would identify this as a risk to a company's future.
Obsolete Technology: Frank & Sons, Inc. was still using an outdated, analog manufacturing process. The company’s competitors had invested in new technology that was 50% more efficient and would allow them to produce a higher quality of goods at a lower cost.

MarketView’s Strategic Recommendations

The MarketView Blueprint is the first step towards taking the emotions out of the situation and giving the family a clear, objective assessment of their options. We were able to get them all on the same page by providing a clear, unbiased assessment of their current value and a strategic roadmap to protect their legacy.

Value Clarity: The first step was to establish the business's true market value using current market data and accepted industry valuation methods. We helped the family understand that, despite the macroeconomic challenges, the business was still a valuable asset. The family learned that the value of their business was based not only on its past, but also on its future potential.
Define the Future: We met with Robert and his family and helped them define their financial and non-financial goals. The family was able to create a clear plan for their post-exit life and a clear vision for the future of the business, which was crucial for them to get on the same page and align on a decision to sell.
Identify Opportunities for Performance Improvements: A new part-time director of sales created and implemented a growth strategy that involved expanding sales of existing products into new geographic markets. At the same time, the COO located several new raw materials suppliers offering higher quality products at a lower cost. This improved profit margins immediately and allowed the company to grow sales by becoming more competitive in existing and new markets.
New Employee Recruitment Plan: With the help of an outside consultant, the company developed a plan to attract and retain a younger, lower cost workforce. Through this effort, the average age was reduced to 47 and labor costs dropped 15%.
New Technology: Despite high interest rates, we identified new tax incentives that would make it feasible for the company to invest in the technology they needed to be competitive with the top performers in the industry.

The Big Decision

The Frank family recognized that regardless of whether they ultimately sell the business, meaningful improvements are essential to protect and enhance the value of Frank and Son’s, Inc. They committed to implementing the outlined changes, continue to operate the business for the next 18 months, and reassess their options at that time. In the interim, Robert Sr. stepped back from his day-to-day responsibilities and to pursue two lifelong dreams: teaching an entrepreneurship course at the local community college and finally learning to play the piano—something he had wanted to do for over 40 years.

A Message for Our Valued Referral Partners

Robert’s story highlights the critical role a pre-transaction advisor plays. As a CPA, attorney, wealth manager, or consultant, you’re often in the best position to identify when a client is unprepared to make the difficult decision whether to sell or retain ownership of their business.

Engaging MarketView early not only protects and promotes your client’s value but also increases the certainty that they will have a successful exit.

Remember: Successful business sales don’t just happen—they’re the result of smart, deliberate preparation.

Ready to Create Your Business’s Blueprint for Success?

Don’t let emotions or a lack of planning jeopardize the business you’ve worked so hard to build. The MarketView Blueprint equips you with a clear, objective strategy to protect and increase your company’s value, increase its salability, and position you for a successful sale or capital raise.

Jay Carter

CEO, MarketView

jcarter@market-view.com

704-904-7543

For a founder ready to secure their financial freedom, the sale of their business is usually the transaction that funds their future. Yet, the outcome remains hostile: over 50% of attempted sales fail. The market no longer rewards integrity alone; it rewards protocol and verifiable data.

This month, we confront the reality that AI has become the perfect internal auditor, exposing the simple, subjective financial mistakes common to middle-market firms.

Case Study: Apex Manufacturing and The $6M Surprise

The Setup: The Illusion of Order

Apex's $35M valuation target was swiftly demolished when the AI, with precision and speed, flagged two common, yet critical, financial liabilities that caught the business owner by surprise. The machine doesn't care about the owner's subjective intent; it cares only about quantifiable, verifiable risk.

1. Inventory Inconsistencies: The Obsolete Asset Trap

The AI's first line of attack was the Balance Sheet, specifically Inventory. In privately held firms, obsolete inventory is frequently overvalued or simply not written down because the owner intends to eventually use or sell it.

The AI's Method: The system ingested five years of inventory reports, cross-referencing aged stock (36+ months old) with the pace of sales by SKU. It flagged a chronic inconsistency in how Obsolete Inventory was valued. The machine determined that Apex was significantly overstating inventory value by treating older stock as "current."
The Financial Blow: This immediately triggered a $2 million negative adjustment to the Balance Sheet. By forcing the write-down, the buyer establishes a lower net working capital balance at closing, and an equivalent reduction in the purchase price.

2. Timing Trouble. The Accrual Accuracy Gap

Many privately held companies operate without a disciplined month-end or year-end close, which can lead to understated expenses and overstated EBITDA. What may seem as an harmless shortcut becomes silent distortion of true profitability.

The AI's Method: The system cross-referenced historical Cost of Good Sold with prior periods and invoices. It found that COGS for the most recent period did not include $800K worth of costs relating to raw materials and subcontractors–materials and services that had been delivered, but for which no invoice had been received and no accrued liability was recognized. Similar discrepancies were identified in previous years.
The Financial Blow: The AI identified that this relaxed accounting discipline distorted the true EBITDA for the period by the amount of the unbooked costs. Applying a 5x EBITDA multiple, the buyer dropped their offer by $4M instantly.

Together, these two factors pushed the valuation down from the $35M expected to just $29M, well short of owner’s goal. The gap created an unbridgeable divide between buyer and seller and the deal collapsed.

The Strategic Mandate: Your MarketView Blueprint Defense Protocol

The MarketView Blueprint is the essential defense. My mandate is clear: You must use AI to find and confirm the value you believe to be yours really is–before the buyer does.

Risk Exposure and Valuation Impact

Risk Exposure: Buyers are using AI to exploit the subjective "gray areas" common in privately held books. If you don't run an AI audit, you are guaranteeing the buyer will find unrecognized liabilities.
Valuation Impact: The buyer's AI team leveraged the sum of these simple accounting missteps to justify the entire $6M discount and demonstrate the principle: Unclean books are now an instant, quantified liability.

The Solution: Eliminating Penalties with Protocol

The Solution: You must utilize the same advanced tools to stress-test your own financials. This pre-emptive effort eliminates hidden liabilities (like misclassified inventory or inaccurate reporting of expenses) that lead to instantaneous, quantified valuation reductions.
The Protocol: The MarketView Blueprint provides the protocol to correct these mistakes:

Inventory Protocol: Implement a clear, documented policy for writing down or disposing of obsolete inventory to align Net Working Capital with institutional expectations.
Expense Protocol: Close out books consistently on a monthly basis, ensuring reported profits and Adjusted EBITDA are unassailable and based on accurate costs.

And it’s not that AI uncovered anything a capable human analyst could not have found. The significance is that AI surfaced these liabilities almost instantly. Business owners need to use the same powerful tools buyers will use because speed matters. The sooner these risks come to light, the sooner they can be addressed. This also prevents owners from entering a sale process with unrealistic expectations, which is often where deals begin to fall apart.

The only way to control the negotiation is to have perfect information first.

A Message for Our Valued Referral Partners

AI has eliminated the margin for error and amplified the need for human expertise.

The threat is not abstract; it's operational. AI finds the simple mistakes in your client's books instantly. The MarketView Blueprint is the mandatory pre-transaction protocol that enables your clients to run their own AI audit and eliminate these risks before their data goes into a buyer’s machine.

Ready to Fortify Your Enterprise Value?

Don't let machine-driven due diligence expose unrecognized vulnerabilities and torpedo the most important financial transaction of your life. The MarketView Blueprint equips you with a clear, objective strategy to protect and fortify your company’s value, ensuring you control your exit.

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