You Can’t Sell your Business in a Day

By Dave Driscoll, President and Business Broker

As business brokers, by the time a business owner contacts us to sell a business, he or she is usually ready to walk out the door and leave the business behind…tomorrow.

To say that is unrealistic is a serious understatement.

Selling a business is a complex, long process…Preparing To Sell Your Business

Phase 1: Preparing your Business for Sale

Sadly, many businesses don’t sell at all, often because the seller has waited too long and business value has suffered, the financials aren’t structured to present a consistent story, and/or the business is priced too high based on emotional rather than objective business value. Make sure you and your business broker commit the time and energy necessary to properly prepare before launching the business for sale.

First things first
To effectively help you sell your business, your business broker must learn the ins and outs of your business, a well as your goals. This education about your business usually begins with a comprehensive analysis of the company’s historical financials. As the owner, this means you will need to assemble three to five years of tax returns, as well as balance sheets and operating profit & loss statements.

Obviously, the amount of time needed to assemble accurate, complete financials and information depends on your company’s corporate hygiene. Good corporate hygiene has three main components:

  1. Clean, accurate financials that tell the true story of the business.
  2. Documented processes and procedures that define the “how to” of your operations.
  3. Well-defined Human Resources policies and management.

Side note: If your financials are not well-organized and complete, start now! Regardless of your business’ stage in the life cycle, you need to assess your company’s financials at least quarterly to look for opportunities and minimize any problems. Updated balance sheets and profit and loss statements are crucial to running a healthy business.

An experienced, professional business broker (or mergers and acquisitions advisor) will use your documentation to determine the accurate Seller’s Discretionary Earnings (SDE) – discretionary expenses need to be identified and either added back, or subtracted from the operating expenses of the business, to determine the TRUE cash flow (and value) of the business. All of this data needs to come together logically to describe your business through historical and current financial performance, cash flow, and assets.


All of this information is used to create a comprehensive valuation of what your business is worth. The process to complete a valuation typically takes two to four weeks, depending on the size and complexity of your business. Straight-forward, complete financial records help the process move more quickly.

The valuation, as well as industry comparisons and multiples, provides realistic guidance for pricing your business for sale.

Phase 2: Marketing your Business for Sale

Following the valuation and setting a “most probable sale price,” business brokers should conduct an in-depth interview with the owner. This facilitates creating a confidential marketing document to tell the story of your business to prospective buyers. Additionally, the business broker must present the current owner’s vision for business’ growth potential for a new owner, as well as industry information. Ultimately, this confidential document will help a prospective buyer determine if he/she is interested in proceeding in the purchase process.

Simultaneously, a brief anonymous profile of the business for sale is also created. This serves as the teaser to attract potential buyers, without compromising confidentiality. Because the larger marketing document includes the identity of the company for sale, as well as other confidential financial and operating information, any prospective buyers should be vetted by your business broker before receiving the information. Your business broker should obtain a signed Confidentiality Agreement from the prospect and determine if he/she is a feasible buyer financially before sharing any identifying information.

The marketing document has only one chance to make the right impression – don’t waste that opportunity by rushing through the preparation.

Getting the word out

Your business broker should have a broad network of buyers and professionals who advise buyers. This network, in combination with online resources aimed at prospective buyers, will be the foundation for promoting your business for sale (anonymously, unless you choose otherwise). In addition, good brokers will customize marketing campaigns specifically for your industry as needed.

Your job

While your business is marketed for sale, your primary responsibility as the owner is to keep running the business! Continue to focus on efficiency, quality, customer service and good corporate hygiene to preserve (or even enhance) business value. Delegate responsibilities for daily operations to your management team to reduce the company’s owner-dependence. Too many business owners wait until they are burnt out to begin preparing for selling the business – this is a serious mistake that will be costly both during and long after the transition out of the business. To be brutally honest, every owner WILL leave the business eventually, one way or another; always be prepared and run your business in such a way that you could sell your business tomorrow if needed or wanted.

Your other important duty while your business broker looks for a new owner for your business is to prepare yourself. Chances are, your self-identity is pretty tied to your role as a business owner – you are used to being in charge, enjoying both the responsibility and the prestige of being THE leader. Don’t underestimate the emotional impact of transitioning from being a respected owner to “just” a private citizen. Often these emotions cause overwhelmed owners to avoid, delay, or suppress planning their exit until there is a business crisis, health scare, or similar trigger that causes them to take action. Too often, both the business and the owner are past their prime by that point and the transition is not what the owner envisioned – a disappointing result for a life’s work.

If you don’t take time to consider your dreams, define who you are, and envision what you want to give and receive from life, you are jeopardizing a valuable chance for self-fulfillment. This is the time to explore new or neglected hobbies and passions, find volunteer opportunities that reflect your personal values, connect with a peer network outside of your work life, and make realistic plans to fill your days in a meaningful way after that well-earned vacation.

Discuss your ideas, fears and priorities with significant relatives, friends and advisors. These important individuals in your life will be good sounding boards and may help you recognize aspects of your personality that you are disregarding. And don’t hesitate to consult with experts; industrial psychologists have tools and insight to help you understand how to satisfy your social, emotional and leadership needs for your new role after business ownership. These discussions and tools will shed light on how you can have the personally fulfilling Life Beyond Business™ that you deserve.

Phase 3: Navigating the Offer and Due Diligence

Keep in mind that there will usually be several good prospects who entertain the idea of purchasing your business before the right buyer is found. The seasonality and health of your industry, time of year, and economic conditions can all impact the length of time it takes to identify worthwhile prospective buyers and sell a business.

After vetting prospective buyers, introducing serious prospects to the seller, and answering more in-depth questions, the process may eventually lead to a Letter of Intent (LOI). Your business broker should present the pros and cons of any offer, while providing you with the necessary information and experienced perspective to make an informed decision.

In conjunction with legal counsel, your business broker helps guide the buyer and seller to reach acceptable terms and assist in locating financing options for the deal, if needed. Likewise, your business broker needs to help manage the buyer’s due diligence process to successfully avoid or resolve the issues that undoubtedly will occur during this critical stage. Typically, the due diligence period lasts 30-60 days. Your broker should regularly collaborate with legal, accounting, and financing professionals who specialize in business sale transactions. Your broker can assist with referrals to a professional that is a good match for your situation as needed. When selling your business, your broker should function as a quarterback to ensure all of your advisors are working together to maximize your results and reach your goals.

St Louis business broker advice: Seller financing results in more money when you sell your businessPhase 4: Closing the sale

Negotiating and finalizing the Asset Purchase Agreement can be complicated and involve a lot of back and forth regarding little details. Your business broker will facilitate the communication and keep the process moving as the Purchase Agreement and all other associated documents (depending on the specific deal structure) are reviewed and agreed upon by both parties and their attorneys. Once that is accomplished, everyone meets at the closing to sign the papers and collect your proceeds of the sale!

In a nutshell

Compiling and presenting the information accurately is essential to a successful sale and will require a dedicated focus over and above the day-to-day energy you put into running your business. A dedicated, professional business broker will have the experience, skills, time and network to prepare, market and sell your business as efficiently as possible, resulting in the best financial return for you. Sellers should anticipate that the preparation process through the closings of the sale will take at least six months to a year.  Just remember, even when the stars align, the sale of your business will still probably take more time than you’d like. Don’t wait until you are burnt out to begin the process!

Editorial Comment:

Your business broker should be with you every step of the way – from the initial business valuation and preparation to the closing table -taking an active role as your advocate AND objective advisor. Use the expectations detailed in this article to find the right business broker for your needs. Beware of any broker who just wants to list your business and then show up for the commission check at closing, with no real participation in between. If a business broker does not provide this level of professional guidance, seriously question what you are paying for – make sure you get your money’s worth and ensure the best chance of selling your business for the highest value.


Dave Driscoll is president of Metro Business Advisors, a mergers and acquisitions business broker, business valuation and exit/succession planning firm helping owners of companies with revenue up to $20 million sell their most valuable asset. Reach Dave at [email protected] or 314-303-5600. For more information, visit


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