A Guide to Selling Your Business: Steps to Follow

April 5th, 2023, 7:00 AM

Selling a business is often an intimidating and nerve-wracking process for many business owners. However, with the right guidance, it can be a straightforward and manageable process. In this blog, we will provide you with a step-by-step guide to selling your business.

Step 1: Get Your Business Ready for Sale

The first step in selling your business is to prepare it for sale. You need to get some of your documents in order and ensure that your financial statements are in order. This step is essential to get your business ready to be marketed. Just like staging and decorating your house, you should make sure that your business looks its best to potential buyers.

Step 2: Find a Buyer

Once your business is ready for sale, the next step is to find a buyer. There are several ways to find a buyer for your business, including using a broker, advertising, or approaching potential buyers directly. This step is crucial, as finding the right buyer can make a significant difference in the success of the transaction.

Step 3: Exchange Information (Due Diligence)

After you have found a potential buyer for your business, the next step is to exchange information, commonly known as due diligence. The buyers will want to see some basic information, such as financial statements, corporate documents, and customer and employee lists. You may have a buyer sign a nondisclosure agreement (NDA) as part of this process. Eventually the buyer will want to see more information, so it's important to have that prepared as well. To see a complete list of nearly 100 documents the buyer may request from you, click the link below.

Get the List

Step 4: Agree on the Material Terms of the Transaction

Agreeing on the material terms of the transaction is the most critical and most challenging step in the process. This step involves determining the purchase price and other major terms of the transaction, such as whether it will be an assets or stock sale, and whether there will be payments structured over time. Once you agree on the material terms of the transaction, you can move on to the next step.


Step 5: Sign a Letter of Intent and Continue with Due Diligence

After agreeing on the material terms of the transaction, you may sign a letter of intent (LOI). The LOI is not legally binding but lets the buyer and seller know that you have reached an agreement on some of the terms and are proceeding with the process. The due diligence process will continue at this stage, allowing the buyer to review and verify all the information. Get the list of nearly 100 documents that a buyer may request from a seller by clicking the link below:

Get the List

Step 6: Draft and Negotiate the Purchase Agreement

Once the due diligence process is complete, it's time to draft and negotiate the purchase agreement. This is the legally binding contract where the seller agrees to sell, and the buyer agrees to buy. The agreement includes all material terms of the transaction and may also include other provisions such as earn-out provisions or a holdback of sales proceeds.

Step 7: Work Towards Closing

After signing the purchase agreement, the final step is to work towards closing. This step involves tying up any loose ends and ensuring that all the necessary paperwork is in place. Once all the formalities are complete, the transaction is complete, and the buyer takes over the business.

Selling a business may seem daunting, but by following the steps outlined above, you can make the process manageable and straightforward, and move on to the next phase of your life with confidence and peace of mind. For more information about how to prepare your business for sale, especially with the due diligence process, download our free checklist here.

Download the Checklist

Return to all Blogs

Have a
Contact Us

Message Us

By submitting this request for information, I agree that I have not entered into an attorney-client relationship and I am at this point only requesting information. I understand that I may only retain an attorney by entering into a fee agreement that will take place if and when it is determined that I have a lawsuit. Moreover, I understand that I will not be charged for a response to my questions set forth above.