Selling a percentage is a different transaction from selling the business, with a different buyer and a much smaller pool of them. A minority holder in a private company cannot control distributions, hiring or an exit, and the price reflects that whatever the arithmetic on the whole company suggests.
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Who actually buys a minority stake
Existing shareholders and management first, because they already have the information and the motive. Then a fund taking a structured position with protections written into a shareholders agreement, and occasionally a strategic partner. A stranger buying a passive minority in a small private company is rare, and pricing on the assumption that one exists wastes a year.
Why the discount is real
A minority holder receives what the majority decides to distribute and exits when the majority decides to sell. That is not a theoretical risk, it is the ordinary experience of minority holders in private companies. The discount for lack of control is a recognized feature of valuation rather than a negotiating tactic by the buyer.
What the paperwork has to do
A shareholders agreement is the whole deal: distribution policy, information rights, board representation, tag along rights so the minority is carried on an exit, drag along rights so a small holder cannot block one, pre emption on new shares, and a mechanism for resolving deadlock. Negotiate that document harder than the price.
Other questions people ask
Can I sell 25% and stay in control?
Yes, and that is the usual reason for doing it. The buyer will want protections in return, and those protections are where control actually gets negotiated.
Is it easier to sell the whole business?
Almost always, because the buyer pool is far larger and the price is not discounted for lack of control.
What about selling to an employee group?
That is a succession route with its own structures and tax treatment, and it is a different conversation from selling a stake to an investor.