Understanding the Process of Selling Your Business

I put together an outline describing the key stages to help you better understand selling your business two years ago and I thought it could use an update. Here is the revised version.

Feel free to reach out if you have any questions.

1. Business Valuation and Preparation

• Analyze your financials, operations, customer base, and market position.

• Determine a realistic market value based on industry benchmarks and current conditions.

• Sign a representation agreement to begin the sale process (if working with a business broker).

Tip: Start organizing your records early. Clean, accurate financials can boost your business’s value and reduce buyer concerns.

2. Marketing Your Business (Confidentially)

• Create a marketing strategy tailored to your business and ideal buyer profile.

• Create a business opportunity description. Ensure that it does not contain information that could be used to identify the business.

• Create an NDA and buyer profile template. Require every buyer to sign the NDA and complete the buyer profile.

• Prepare a Confidential Information Memorandum (CIM) to present the business to qualified buyers.

• Market your business confidentially to protect your staff, clients, and reputation.

• Screen all buyer inquiries and qualify serious prospects.

Note: Confidentiality is critical. The right process ensures your business continues running smoothly during the sale.

3. Buyer Negotiations and Offers

• Facilitate conversations with interested buyers.

• Review offers with your trusted team of advisors.

• Negotiate a deal structure, terms, and timelines that align with your goals. There are many different ways to structure the deal 

Tip: There are many different ways to structure the deal. The highest offer isn’t always the best one. Consider deal terms, financing structure, and buyer qualifications.

Note: Do not share sensitive information such as tax documents, customer lists, or employee records at this stage.

4. Due Diligence

Before you start this stage, you should have accepted an offer. This is typically presented in the form of a purchase agreement or a letter of intent (LOI). Proceed with caution and make sure that your team of advisors is involved.

• Set up a secure data center to manage confidential information.

• Support the buyer in reviewing financial statements, contracts, and operational documents.

• Complete seller and buyer disclosure statements.

• Address questions and concerns to keep the deal moving forward.

• Negotiate and complete allocation of the purchase price.

Note: This step often takes longer than expected. Transparency and responsiveness go a long way.

Note: Working with the buyer (and their CPA) to allocate the purchase price has tax implications and should be reviewed with your accountant.

5. Preparing for Closing

• Review and approve all final documents, including the purchase agreement and closing checklist.

• Confirm that financing, escrow, and due diligence items have been completed by all parties.

• Coordinate final details with your attorney, accountant, and the buyer to ensure a smooth handoff.

• Start developing a transition plan with the buyer. This should cover how the sale will be communicated to employees, customers, and vendors, and outline the training and support the seller will provide after closing.

• Schedule and confirm the official closing date.

Tip: Double-check all final deliverables, including asset lists, transition plans, and payment instructions. Attention to detail at this stage helps prevent last-minute delays.

6. Closing and Transition

• Manage the legal and financial transfer of ownership.

• Transfer contracts, utilities, licenses, and domain/email addresses.

• Assist with transition planning, such as client or employee introductions.

• Ensure that both parties adhere to the terms outlined in the agreement.

Note: A well-planned transition helps protect the business’s future and reassures the buyer. Part of the transition typically involves introducing the buyer to staff and managing employment status changes with the guidance of legal counsel.

7. Post-Sale Support

• Fulfill any post-closing obligations outlined in the purchase agreement, such as training the buyer or being available for a consultation period.

• Notify clients, vendors, and partners if appropriate and agreed upon.

• Cancel or transfer licenses, subscriptions, and business accounts as needed.

• Work with your accountant to file final tax documents and address any reporting requirements.

Tip: Make a checklist of your remaining responsibilities and tackle them promptly. Wrapping things up cleanly helps you move on with confidence and peace of mind.

Selling a business is a complex process, and we are here to assist you at every step.

We also have an FAQ: Selling your business, which we put together to cover many common questions from business owners as they prepare to sell their businesses.