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Buying or Selling a Business NEW

You’ve worked long and hard to build your business. But for whatever reason, you’re considering selling. This can be a complex endeavor filled with seemingly endless questions.

How do you value your business? How do you market it? How do you negotiate with a potential buyer? What steps do you take to close the deal? These are just a few of the issues that must be addressed.
 
Selling your business can be financially rewarding and provide you with the personal satisfaction of knowing that what you created will continue. Plus, you’ll give someone else the chance to be a small business owner.
 
An SBDC Certified Business Advisor can be a valuable resource during the selling process.

FAQs

  • Getting your business ready to sell

    Plan ahead — even one to two years in advance. In order to get the best price and ensure continued success of the business, you may need to take specific steps, including making the business more profitable and writing documentation that will assist a buyer.

  • Questions to ask yourself

    You should be able to answer the following questions:

    • Why are you selling your business?
    • Why should they buy your business?
    • Is this the right time to sell?
  • Get your books in order

    Buyers evaluating your business will generally require at least three years of financial information, including tax returns and a current balance sheet. You should have the most recent 12 months’ financial statements by month, as buyers will want to see any seasonal fluctuations. Have a list of the assets for sale and either the current book value or a supportable value of each. Other information that might be valuable for a buyer include permits, licensing, leases, customer and vendor contracts, supplier lists, and marketing materials.

  • Get a business valuation

    Placing a dollar value on your business is a complex process. A professional valuation will give you an idea of what your business is worth and help you set your asking price. It will also tell you if there are weak areas that you may be able to correct before you put your business on the market. Key factors to consider include:
    • Asset value
    • Revenues
    • Earnings or discretionary cash flow
    • Applying a multiple to discretionary cash flow
    • Feasibility

    Your SBDC Certified Business Advisor can explain to you, using your financial data, the most commonly used valuation techniques.

  • Assemble an advisory team

    Your advisory team typically includes your attorney, your accountant, possibly a business broker or realtor, your banker, and your SBDC Business Advisor.

  • Determine a marketing strategy

    How will you market your business for sale? Determine your strategy, prepare a marketing package and implement your action plan. Are you comfortable negotiating with potential buyers? If not, or if you have an emotional attachment to the business, it may be helpful to use an intermediary such as an agent or broker.

  • Prepare for prospects

    Make sure you will be available to meet with prospective buyers and answer their questions. Keep your business ready to be shown at any time.

Online Resources

  • BusinessTown.com: Selling a Business

    Tips on selling a business and related web resources.

  • Buy or Sell a Business

    Search for business opportunities, businesses for sale, of all types and sizes. Also featured at Inc. and WSJ Startup Journal Web sites. Under "Sell your biz" and "Buy a biz," find a free business valuation calculator, information about valuing and appraising a business, financing a purchase, and more.

  • Closing a Business Checklist

    Find forms and information with regard to filing an annual tax return for the year you go out of business, reporting the disposal of business property, and other actions you will need to take (from the IRS Web site).

  • IBBA - Businesses for Sale

    The International Business Brokers Association has created a free searchable database of businesses for sale nationwide.

  • Sales Agreement

    Checklist of items that must be on the written sales agreement (from SBA's Small Business Planner series).

  • Valuation Resources

    Offers links to associations, industry reports and other pertinent industry-specific information classified by SIC.

  • Valuation Rules of Thumb

    Why and how they are used.

  • What are some financing options for selling my business?

    Q&A from the American Institute of Certified Public Accountants on financing ideas for transferring or selling a business.

  • What is My Business Worth?

    Ways to decide what your business' market value.

  • What's Your Company Really Worth?

    Knowing your company's range of value is important. Several options for determining fair value, along with equations for calculating value, are included. From The Edward Lowe Report.