Buying & Selling a Business
Guide to Buying & Selling a Business
This comprehensive guide walks you through all the essential steps—from setting objectives to closing smoothly—so you can confidently navigate the process while keeping your business running.
1. Clarify Objectives
Define your goals clearly. If buying, decide on industry, location, size, and revenue/EBITDA targets. If selling, identify your ideal timeline, exit goals, and non-negotiable deal terms. Document what matters most to streamline the process.
2. Financial Readiness
Buyers should assess available capital, evaluate financing options (debt, equity, seller notes), and understand lending criteria. Sellers should prepare 3–5 years of financials, normalize add-backs, and compile a clear picture of profitability drivers and risks.
3. Accurate Valuation
Use a data-driven valuation approach—SDE or EBITDA multiple, comparable transactions, and risk adjustments. A realistic value range aligns buyer expectations and supports negotiation.
4. Packaging the Opportunity
Create a compelling yet confidential Information Memorandum that outlines business strengths, growth potential, and transition plans. Protect sensitive details by releasing them only to qualified buyers under NDA.
5. Strategic Marketing
Promote discreetly across relevant platforms—broker networks, industry groups, targeted ads—with language that doesn’t reveal identity prematurely. Broad reach, focused messaging.
6. Buyer Review
Screen buyers for financial capacity, operational fit, and seriousness. Use NDAs and vetting questionnaires, and confirm they understand your expectations before sharing detailed information.
7. Offers & Letters of Intent
Negotiate price, terms, and contingencies—closing timeline, financing, non-compete, etc.—through a structured Letter of Intent. Use it to lock in major deal points before moving to due diligence.
8. Due Diligence Management
Coordinate document requests and clarify variances efficiently. Solve issues proactively and keep momentum with clear deadlines and follow-ups. Communication is key to prevent delays.
9. Financing Structure
Explore SBA (e.g., 7(a)), conventional loans, seller financing, and equity options. Tailor the structure to the business’s cash flow profile and ensure all parties are aligned on terms.
10. Closing & Transition
Finalize documents, transfer ownership, and manage transition—training, customer/vendor notifications, systems access—to preserve continuity and value for the new owner.
Why Professional Guidance Matters
- Confidentiality: Protects business identity and staff morale with discreet marketing and NDAs.
- Efficiency: You continue operating normally while paperwork and negotiations are handled.
- Expertise: Professional vetting, valuation, and negotiation minimize risk and maximize outcomes.
Note: Every transaction is unique. This guide is for informational purposes only and not legal or financial advice. Consult your professional advisors for personalized guidance.