Process of Selling a Business
Below is a detailed, step-by-step breakdown of the business sale process, from preparation through closing and post-transition. Each phase outlines key goals, deliverables, and the main parties involved.
Consult
A clear understanding of what a potential deal can bring to the company is as crucial for the seller as it is for the buyer. This is where we truly make the needs assessment for you. The goal at this stage is to create the selling strategy and set objectives we want to achieve with a potential acquisition and define ideal potential buyers. It’s also important to be realistic and transparent with each other and allow the company’s financial and market decisions to help drive the strategy.
Duration: 1-2 months
Valuation
The valuation phase is a key step in selling a business and determines its fair market value (FMV) — what a qualified buyer would reasonably pay under normal conditions. During this stage, the owner or advisor takes the deliverables from the CIM to paint a complete picture of the company’s performance. These financials are then normalized, or “recast,” to remove non-recurring, personal, or non-operating expenses so the business’s true earning power is shown through EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or SDE (Seller’s Discretionary Earnings). Next, one or more valuation methods are applied. The market approach compares the company to recent sales of similar businesses and applies industry multiples; the income approach projects future cash flows and discounts them to present value; and the asset approach values net assets when the business is asset-intensive or not consistently profitable. Qualitative factors such as management strength, customer diversity, brand reputation, and industry trends are also weighed to adjust the final value range. The outcome is a valuation report that summarizes assumptions, methods, and a justified price range. This report becomes the foundation for pricing strategy, deal structure, and buyer negotiations—helping the seller understand what drives value, what may reduce it, and how to position the business effectively in the marketplace.
Duration: 1 month (this is concurrent with Preparation)
Preperation
Once confirming the interest in selling the company, we should prepare an exhaustive kit that will present the target company to the potential buyers. If the seller works with investment bankers, they will prepare a confidential information memorandum (CIM). A CIM is a document that comprises all the information about the company’s financials, market position, products, and services to create a valuation. From the CIM, the seller can extract information to create short documentation such as an executive marketing plan, teaser, or marketing materials to share with a potential buyer. Goal at this stage would be to to present a clear and defensible picture of profitability and growth potential.
Duration: 2 months
Marketing & Buyer Outreach
This phase focuses on attracting qualified buyers while maintaining strict confidentiality. During this stage, the M&A advisor identifies potential acquirers—such as strategic buyers (competitors, suppliers, or related firms), financial buyers (private equity groups or family offices), and/or individual entrepreneurs. Prospective buyers first sign a Non-Disclosure Agreement (NDA) before receiving detailed information. The advisor then manages a very targeted outreach campaign, schedules confidential meetings, and screens interested parties to confirm their financial capability and seriousness. As interest grows, some buyers may submit Indications of Interest (IOIs) outlining their preliminary price range and deal structure. The seller and advisor review and compare these offers, selecting the most promising candidates to advance to the negotiation and Letter of Intent (LOI) stage. This phase is critical because it sets the competitive tone of the sale, balancing exposure with confidentiality to achieve the best possible outcome.
Duration: 1-3 months
Negotiate & Letter of Intent (LOI)
The negotiation and Letter of Intent (LOI) phase is where the seller and potential buyer agree on the main terms of the deal before moving into due diligence. After reviewing offers or Indications of Interest, the seller and their advisor negotiate key points such as the purchase price, deal structure (asset or stock sale), payment terms (cash, seller financing, or earn-out), working capital targets, and transition expectations. Once both sides reach a preliminary understanding, these terms are summarized in a Letter of Intent (LOI). The LOI serves as a roadmap for the transaction—clarifying the buyer’s proposed terms, exclusivity period, and timeline—but it is not legally binding except for certain clauses like confidentiality and exclusivity. This means either party can walk away before signing the final purchase agreement if due diligence or final negotiations uncover issues. The LOI provides structure and commitment for the next phase while giving both sides the flexibility to refine details as they move toward closing.
Duration: 2-4 weeks
Due Dilligence
During this stage, an interested buyer conducts due diligence typically for 45 days and reviews all the seller’s business and financial documentation. The main seller’s objective at this stage is to provide the required documentation and make sure the company is ready for the deal. It is preferential and more efficient for the process to provide all deliverables required by Buyer in a timely manner. However, modern deal makers often admit that it’s beneficial for the seller to perform a "mini" due diligence before the buyer. This way, the sell-side makes sure that they have all the necessary documentation in place to reduce the possibility of complications later. Most buyers have similar work streams and requirements so we can be prepared prior to this phase. Although this phase is exhaustive the goal by buyer is simply to confirm the accuracy of the sellers business claims. Its not meant as a "gotcha" moment by the buyer.
Duration: 1-2 months
Definitive Agreements & Pre Closing
The Definitive Agreements and Pre-Closing phase is where the transaction’s legal, financial, and logistical details are finalized in preparation for closing. During this stage, the buyer’s and seller’s attorneys draft and negotiate the definitive purchase agreement—either an Asset Purchase Agreement (APA) or Stock Purchase Agreement (SPA)—which sets out all representations, warranties, covenants, and schedules defining exactly what is being sold and under what conditions. Supporting documents such as consulting or non-compete agreements, lease assignments, financing arrangements, escrow instructions, and third-party consents are also completed. The buyer finalizes funding sources, while both sides work through a closing checklist to verify items such as working capital, insurance, tax clearance, and inventory counts. Around this time, typically within 30 days of the scheduled closing date, internal planning begins for employee and key-stakeholder announcements to ensure a smooth transition and maintain morale. This phase requires close coordination between advisors, attorneys, lenders, and management teams to align every operational, legal, and communication detail before the final signing and transfer of ownership. Please note: its imperative to utilize attorneys that are transactional in focus otherwise it could create significant delays.
Duration: 1-2 months
Closing
The closing phase marks the official completion of the business sale, when ownership and funds are formally transferred. During this stage, all final documents—such as the purchase agreement, bill of sale, assignment of contracts, and any employment or consulting agreements—are executed by both parties. The buyer wires the agreed purchase price, often through an escrow account, and the seller delivers the assets, stock certificates, or other ownership interests as outlined in the deal. Attorneys coordinate the exchange of signatures, lien releases, and government filings to ensure clear title and compliance with all legal requirements. Once funds are received and documentation is verified, the transaction is declared closed. Immediately after, the parties may complete post-closing adjustments, such as reconciling working capital, WIP, or setting up earn-out tracking. This phase concludes with the transfer of control—giving the buyer operational authority and the seller formal confirmation of sale proceeds—signifying the successful transition of ownership. Today most of this phase is done electronically.
Duration: 1 week
Post Closing
The post-closing phase focuses on ensuring a smooth transition and fulfilling all remaining obligations after ownership officially changes hands. During this stage, the seller sometimes provides transitional support to the buyer—introducing key customers, vendors, and employees, and helping maintain continuity in daily operations. A coordinated communication plan is implemented to inform employees, clients, and partners of the change in ownership, reinforcing stability and confidence in the business’s future. Financially, both parties address post-closing adjustments, such as reconciling working capital, WIP, or releasing escrowed funds once conditions are met. The seller also works with their CPA to handle tax reporting, including capital gains and final payroll or vendor obligations. If the deal includes an earn-out or seller note, ongoing performance monitoring and payments continue according to the agreed schedule. This phase ensures that the transition is seamless, relationships remain strong, and both buyer and seller meet their remaining contractual and financial responsibilities.
Duration: 1-6 months