How to Sell a Business: A Practical Guide for Owners
How to prepare your business for sale, set an asking price, find serious buyers, protect confidentiality and get through due diligence to closing.
Updated
Get ready first
Buyers pay for earnings they can trust. Gather clean financial statements and tax returns for the last few years, tidy up the books, and write down how the business runs so a new owner can take over.
Work out a fair price
Small businesses are often priced as a multiple of seller's discretionary earnings, which is the profit plus the owner's pay and one-time costs. The multiple depends on the industry, size, growth and risk. A broker or valuation professional can give you a supported range.
Decide what is included
State clearly whether the sale includes the real estate, equipment, inventory, the name and the customer list. List the lease terms if the business rents its space, because the landlord's consent can decide the deal.
Market it with care
Describe the business honestly without naming it, so staff, customers and competitors do not find out before you are ready. Share the name and financials only with serious buyers who sign a confidentiality agreement.
Screen the buyers
Ask for proof of funds or loan approval and a sense of their experience. Many small business sales are financed with a bank loan, and some include a note paid to the seller over time.
Negotiate, then check
A letter of intent sets the price and main terms. The buyer then checks the business in due diligence. Answer questions openly; surprises late in the process can lower the price or end the deal.
Close and hand over
Use an attorney to write the purchase agreement and handle the transfer of licenses, contracts and the lease. Plan the handover and any time you will stay to help the new owner.
Common questions
This guide gives general information, not legal, tax or financial advice. Laws, rates and practices differ by state and by deal, so talk to a licensed professional before you decide.