Selling a small business is a project, and most owners only do it once. This guide lays out the whole process in order, from the decision to sell through closing, so you know what is coming and what you can still influence. It is written for the owner of a company doing roughly $500,000 to $20 million in revenue, whether you sell it yourself or hire a broker.
One note before the steps. Almost everything that determines your price is decided before the business is listed. If you have time, read how to prepare a business for sale three years before the exit first. If you do not have time, start here.
Step 1: Decide what you are actually selling, and why
Buyers pay for a business that produces cash without you. Before anything else, be honest about which of these you own:
- A company: a team, systems, repeat customers, and profit that continues when you step away. This sells for a multiple of earnings.
- A job: a book of customers and equipment that only produce money when you show up. This sells for much less, often close to the value of the assets plus a modest premium for the customer list.
Also get clear on why you are selling and what you need from the sale. Retirement, health, burnout, a new venture, and a partner dispute all lead to different timelines and different acceptable deals. Write the number you need down. Then find out what the business is worth; the gap between those two figures is your work plan.
Step 2: Get the financials buyer-grade
Every serious buyer and every lender will ask for the same package. Have it ready before you talk to anyone:
- Three years of profit and loss statements and balance sheets, ideally reviewed by an outside accountant
- Three years of business tax returns
- Year-to-date financials, updated monthly during the sale
- A schedule of owner add-backs: personal expenses run through the business, one-time costs, above-market owner pay
- Accounts receivable and payable aging
- An equipment and asset list with condition and ownership status
- Customer revenue by account for three years
Clean books do two things. They raise the price, because buyers discount uncertainty. And they shorten the deal, because diligence becomes confirmation instead of investigation. If your books are a mess, fixing them is the highest-return work you can do before listing.
Step 3: Find out what it is worth
Small businesses are valued on earnings, not revenue. For most owner-operated companies the measure is seller's discretionary earnings (SDE): net profit plus owner salary, owner benefits, depreciation, interest, and legitimate add-backs. Larger companies with a management team in place are valued on EBITDA.
The value is that earnings number times a multiple. The multiple depends on industry, size, growth, how much the business relies on you, customer concentration, and how much revenue repeats. The full method, with ranges, is in how to value a business for sale.
Get a real number before you list. An owner who knows the value walks into every conversation with leverage. An owner who is guessing gets educated by the buyer.
Step 4: Fix what you can in the time you have
With a value in hand and a sense of what is discounting it, use whatever runway you have. In order of return:
- Get yourself out of the daily operation. Hand customer relationships to your team. Put a manager in charge of the week. Document how things get done. Owner dependence is the single biggest discount on small businesses.
- Reduce customer concentration. If one customer is more than 20 percent of revenue, buyers see risk and price for it.
- Put informal arrangements in writing. Customer agreements, supplier terms, the lease, key employee arrangements.
- Convert one-time work into repeat revenue where the business allows: service agreements, maintenance plans, retainers.
- Clean the balance sheet. Old inventory, disputed receivables, equipment that is not really yours.
Even six months of focused work here can move the multiple. Three years can change the category of business you are selling.
Step 5: Decide how to sell: by owner, broker, or advisor
Selling by owner
You run the process yourself: prepare the package, find the buyer, negotiate, and manage closing with your attorney and accountant. It works best when you already know the likely buyer, such as a competitor, a key employee, a supplier, or a family member, and when the deal is simple. You save the commission, typically 8 to 12 percent on smaller deals. You take on the time, the confidentiality risk, and the negotiation yourself, while still running the company.
Business broker
A broker markets the business confidentially, screens buyers, and manages the process. Most work on commission, often 10 percent for businesses under $1 million and sliding down from there, sometimes with a minimum fee. A good broker earns the fee by bringing buyers you would never find and by keeping the deal moving. A poor one lists you on a website and waits. Ask any broker how many businesses like yours they closed in the last two years, and call two of those sellers.
M&A advisor
For companies above roughly $5 million in value, an M&A advisor or investment banker runs a structured process with multiple buyers, which usually produces a better price than a single negotiation. Fees are a retainer plus a success fee.
Whichever route, you will still need a transaction attorney and a tax advisor who has done deals of your size. The tax structure of the sale, asset versus stock, allocation of the price, and timing, can change what you keep by more than the negotiation does.
Step 6: Find and qualify buyers
Buyers for small businesses come from a few places: individuals leaving corporate careers, often with SBA financing; competitors and companies in adjacent trades; key employees or management; private equity and search funds for larger companies; and family. Each has a different speed, risk appetite, and ability to pay.
Qualify before you share anything sensitive. Use a non-disclosure agreement, a short summary that does not name the company, and a conversation about financial capacity before you hand over detailed financials. A buyer who cannot get financing will cost you three months and tell your market you are for sale.
Step 7: Price it and take offers
Value and asking price are related but not the same thing. Asking price is a strategy decision: where to anchor, how much room to leave, what structure you will accept. Read how to price a business to sell for the detail.
Offers come as a letter of intent (LOI): price, structure, exclusivity period, and a closing timeline. The LOI is mostly non-binding, but it sets the frame for everything that follows. Negotiate the structure, not just the headline: how much cash at closing, any seller financing or earnout, how working capital is handled, and what happens to employees and the lease. A lower price with 90 percent cash at closing is often better than a higher price with half of it contingent.
Step 8: Get through due diligence
After the LOI, the buyer verifies everything: financials, customers, contracts, legal, tax, HR, equipment, and the lease. It takes 30 to 90 days. Deals die here more than anywhere else, almost always from a surprise.
The defense is to run your own diligence first. Go through what a buyer will ask for before they ask. Fix what can be fixed. Have an honest explanation ready for what cannot. Keep running the business well during this period; a dip in sales during diligence is a renegotiation waiting to happen.
Step 9: Close and transition
The purchase agreement replaces the LOI with binding terms. Your attorney handles the document; you handle the decisions in it: representations and warranties, non-compete terms, your transition role and pay, and how disputes get resolved. Expect a transition period of a few weeks to a year, depending on how dependent the business was on you. The better you did Step 4, the shorter this is.
How long does it take?
From listing to closing, six to twelve months is typical for a small business. Preparation before listing adds whatever time you give it. Owners who start three years out usually sell faster and for more than owners who start the month they decide to sell.
The mistakes that cost the most
- Listing with messy books, then losing the buyer in diligence
- Pricing on revenue, or on what you need, instead of on earnings
- Taking the business's foot off the gas during the sale
- Telling employees or customers too early, or letting them find out
- Negotiating price and ignoring structure and taxes
- Accepting the only offer because the process felt like it was taking too long
Where we fit
The Mooresville Group does not broker businesses. We work with owners in the one-to-five-year window before a sale to get the company ready: clean reporting, a business that runs without the owner, and the discount list worked down before a buyer sees it. The Exit Readiness Review is the starting point. The firm's founder sold his own company in 2023 after running it for fourteen years.
Common questions
How do I sell my small business without a broker?
Prepare the financial package, get a realistic value, identify likely buyers you already know (competitors, employees, suppliers), use an NDA before sharing details, and hire a transaction attorney and tax advisor for the agreement and structure. It works best when the deal is simple and you already know the buyer.
How long does it take to sell a small business?
Six to twelve months from listing to closing is typical, plus whatever preparation time you give it beforehand. Clean books and low owner dependence shorten the process.
What documents do I need to sell my business?
Three years of financial statements and tax returns, year-to-date financials, an add-back schedule, receivables and payables aging, an asset list, customer revenue by account, key contracts, and the lease.
How much does a business broker charge?
Commonly around 10 percent of the sale price for businesses under $1 million, sliding lower for larger deals, often with a minimum fee. M&A advisors for larger companies charge a retainer plus a success fee.