Everything You Need to Know Before Selling Your Business
The quick answer
Selling a business usually takes two to five years of preparation and six to twelve months to actually sell. The process follows a clear order: decide what you need from the sale, find out what the business is worth, get your finances and taxes in shape, make the business less dependent on you, then find a buyer, negotiate, and close. You'll need a team along the way, typically a CPA, a financial planner, a business appraiser, an M&A advisor or business broker, and an M&A attorney.
Who do you need on your team?
No one person handles everything in a sale. Here's who you'll likely work with and what each one does:
Financial planner: Helps you figure out how much you need from the sale, plans how the money will support you afterward, and coordinates the rest of the team.
CPA: Cleans up your financial statements, plans for taxes, and helps structure the deal to keep more of what you earn.
Business appraiser: Gives an independent estimate of what your business is worth.
M&A advisor or business broker: Markets your business, finds buyers, and helps negotiate the price. Brokers usually handle smaller businesses; M&A advisors typically handle larger ones.
M&A attorney: Reviews offers, negotiates the legal terms, and drafts the final purchase agreement. Use an attorney who specializes in business sales, not a general practitioner.
Estate planning attorney: Updates your will and trusts and may help move ownership to family before the sale to reduce future estate taxes.
The 5 steps to selling your business
Step 1: Know your number and what your business is worth
Two to five years before. Who helps: your financial planner and a business appraiser.
Figure out how much you need to walk away with after taxes and fees. Then get a valuation to see what your business is worth today. Most businesses sell for a multiple of yearly profit, and the gap between the two numbers tells you how much work is ahead.
Step 2: Get your business ready
One to three years before. Who helps: your CPA.
Buyers want about three years of clean, organized financial statements, with personal expenses separated out. They also pay more for a business that runs without you, so build a team that can handle customers and decisions, and write down how things work.
Step 3: Plan for taxes early
At least one year before. Who helps: your CPA, financial planner, and estate attorney.
How the sale is structured changes how much tax you pay. Some of the best ways to save, like gifting shares to family or charity, only work if they're done before you sign a deal.
Step 4: Find a buyer and close the deal
Six to twelve months. Who helps: your M&A advisor or broker and your M&A attorney.
Your advisor or broker markets the business privately and brings in buyers. When offers come in, look beyond the price: how much you get at closing, how much depends on future results, and whether you have to stay on. After you sign a letter of intent, the buyer spends 60 to 90 days reviewing your business, and your attorney negotiates the final agreement before closing.
Step 5: Plan for life after the sale
Who helps: your financial planner and estate attorney.
Set aside money for taxes right away. Keep the rest somewhere safe while you adjust, then build an investment plan that replaces the income your business provided, and update your will, trusts, and insurance.
Frequently asked questions (FAQs)
How much does it cost to sell a business? It varies, but M&A advisors and brokers are usually paid a percentage of the sale price, and attorneys and CPAs bill for their time. Plan for these costs when figuring out what you'll walk away with.
Who should I hire first? Start with a financial planner and CPA. They help you set goals and plan taxes before you bring in advisors to market the business.
What's the biggest mistake owners make? Starting too late. Many ways to raise your price and lower your taxes need years, not months.
Get a plan before you sell
Thinking about selling your business in the next few years? Reliant Wealth Advisory helps business owners figure out their number, plan for taxes, and build a strategy for life after the sale.
Click here or book a time below:
About the author
Michael Walstedt, CFA, CFP®, is the founder of Reliant Wealth Advisory, a fee-only fiduciary firm in Hoboken, New Jersey. He helps business owners, executives, and tech professionals in the New York/New Jersey area, as well as nationwide, with financial planning and investment management.
This article is for educational purposes only and is not tax, legal, or investment advice. Tax rules change, and your situation may differ. Consult a qualified tax professional and attorney before acting.
