Skip to main content

Nine Tips on Successfully Selling Your Business

George is an independent small business consultant and business owner with a mission to help entrepreneurs improve their management skills.


Business brokers and consultants are always surprised to what extent owners of businesses in both the main street market (with values of $0–$2MM) and the lower middle market (values of $2.0MM–$50.0 MM) tend to either underestimate or overestimate the market value of their business.

This is because their assessment of value is often based on emotions instead of solid metrics such as EBITDA (earnings before interest, tax, depreciation, and amortization) multiples, comparison to similar businesses, future return on investment, and other financial statistics that are critical to a potential buyer.

It is good practice to evaluate what your business is worth under current market conditions because it permits a more objective view in developing a successful exit plan for the owner(s). Current market conditions are sometimes clouded by federal trade policies and tariffs.

Owners who wish to transition from their businesses must evaluate their preparedness to sell in order to obtain the optimum value for their companies and assets. This requires an in-depth organizational, marketing, financial analysis and value comparisons with similar businesses that were recently sold.

Only 15% of small business owners worldwide have an evaluation done by professional evaluators. On average, approximately eight million small businesses sell or merge their businesses in a ten-year time frame.

Often, they go into negotiations totally unprepared and depend on the buyers to do the necessary homework for them. This opens the door to emotional biases influencing the negotiating process, which may lower the optimum selling price. It also causes buyers to be turned off by the unpreparedness of sellers and to back out of potentially good deals.

Nine Key Tips for Selling Your Business

1. Perform a Thorough Check-Up

Like a car, every business needs a regular check-up to achieve optimum performance. This is particularly true if you are thinking of selling the business and wish to maximize its value to potential buyers. This requires a thorough, objective analysis of the organizational, operational, marketing, and financial controls that you currently have in place.

In addition, you must implement changes that will improve efficiency, productivity and profits. This brings immediate benefits and provides a longer time horizon to obtain the best value for your business. You must also decide whether you are capable, knowledgeable and have the necessary time to do this effectively by yourself.

2. Evaluate the Human Capital Within the Company

One of the options in selling your business is to structure the sale to enable it to be accessible to someone within the family circle or to your management team. While it is natural to favor family members, it is essential to be as unbiased as possible in choosing a successor.

While family dynasties have thrived in the corporate world, it is essential that the mantle of succession passes to the most capable hands. For outsiders, the value of the company will be enhanced if they see management depth after the exit of the owner(s).

A formal evaluation of the top personnel is useful when planning an exit or succession. Reviewing how they have achieved measurable goals in the last 1-3 years will provide a useful indicator of your human capital.

Scroll to Continue

Read More From Toughnickel

3. Delegate Your Key Responsibilities

The quicker you pass some of your key responsibilities and vested authority to others, the better it will be to assess their leadership capabilities. Letting them know of your intention to sell raises their motivation level to succeed. It is essential to introduce them to the company’s top clients so that there is a seamless transition in sales, marketing and customer service.

Above all, force yourself to step back and let them manage with as little interference as possible. Potential buyers will be impressed if they see that the business can run efficiently without the owners.

4. Test the Insider Options

If your intention is to pass the business on to family members or managers, let them know what the business is worth and how that evaluation has been achieved. With professional help from accountants, lawyers and business brokers, you can then put forward a draft of a buy-out plan that can be mutually agreed on. This will provide an early indicator of whether this is a feasible avenue to explore in selling your company to insiders.

5. Define Your Company Culture

Many sophisticated buyers are not solely interested in the financial numbers. They also wish to know whether the existing company culture and public image provide a good fit for them.

Sellers develop an emotional attachment to their business model and want to pass it on to someone who would appreciate its essential qualities. Simultaneously, buyers are well aware that the existing culture may have contributed to the success of the company and may wish to preserve some of its attributes.

6. Expand Your Search Options

Once family members and key executives learn of your intention to sell, the dynamics within the company may change. There will be a push to ingratiate themselves to the owners so as to increase their chances of being part of the takeover group. Let them know that you are looking at other options that serve the best interest of the stakeholders and employees.

After an assessment of existing leadership strengths, it may become evident that the best course of action is to look for external merger and acquisition candidates. This will probably require the professional assistance of business brokers and/or investment bankers.

7. Search for a Good Third-Party Fit

Established and certified business brokers can use their vast knowledge and extensive network of buyers and sellers to find the best vertical and/or horizontal fit. Their expertise can be boosted by the in-depth knowledge of the competitive environment provided by the owners.

In many cases, competitors may be viable potential buyers and should be included in the search. Overtures to competitors are very sensitive and are best handled through discreet third parties. It is essential to convey that you are dealing from a position of strength and have several interested parties.

8. Set a Specific Date for the Sale

Selling plans are often sabotaged by procrastination. In order to overcome the emotional hurdles, make this a high priority and put together a step-by-step action plan.

Setting a reasonable time frame provides the basis for a schedule of tasks that need to be completed by the company managers and business brokers. Leaving key decisions to the last minute can have dire consequences that impede a smooth transition to new owners.

9. Be Prepared to Assist the Transition

Buyers often expect the owner(s) to stay on for a specified transition period in an advisory capacity. The length of time becomes part of the negotiation process. It is in the sellers’ interest to make themselves available and to have it understood that they are committed to assisting in achieving a smooth transition.

This is a strong indicator to the buyers of good intentions and that there are no hidden skeletons. In the case of a takeover by the family or management team, this should entail a form of behind-the-scene mentorship with a clear exit date.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Related Articles