How to Sell My Business: A Step-by-Step Exit Guide

Why Most Business Owners Screw Up Their Exit

I've sold five SaaS companies. The first exit was messy-I left money on the table because I didn't know what I was doing. By the fifth, I had a system. The difference between a mediocre exit and a great one usually comes down to preparation, timing, and knowing exactly what buyers care about.

Most founders wake up one day and decide they want to sell. They haven't cleaned up their books, they don't have clear revenue metrics, and they definitely haven't built the business in a way that's attractive to acquirers. That's backwards. If you're serious about selling, you need to start preparing at least 12-24 months before you actually want to close.

Here's the reality: buyers are skeptical. They assume you're hiding something. They're going to dig into every corner of your business during due diligence, and if they find inconsistencies or red flags, they'll either walk away or slash the price. The businesses that command premium valuations are the ones that have their shit together from day one.

Understanding What Your Business Is Actually Worth

Before you do anything else, you need to understand how buyers value businesses. This isn't guesswork-there are established methods based on your business model, size, and industry.

For SaaS companies, . The market has cooled significantly from the pandemic boom. .

What drives these multiples? It's not just revenue. . If you're growing at 30% annually with a 15% EBITDA margin, you hit 45. That puts you in premium territory.

Service businesses and agencies typically sell for 2-4x EBITDA. E-commerce businesses often sell for 2-4x annual profit. The key difference is that SaaS businesses get valued on revenue because of predictable recurring cash flow, while other models get valued on profit because revenue can be volatile.

Your specific multiple depends on several factors. Revenue growth rate is huge-buyers pay premiums for growth. Profit margins matter because they show operational efficiency. Customer concentration is a red flag-if one client represents 30% of your revenue, buyers will discount your valuation heavily. Churn rate for SaaS companies can make or break a deal. And how automated and systematized your business is directly impacts whether buyers see it as an investment or a job.

The Business Valuation Process

Get a professional valuation done before you go to market. It costs a few thousand dollars but gives you a realistic baseline and credibility with serious buyers. Don't rely on online calculators or what your buddy's cousin got for their business. Every business is different, and professional valuators will adjust for your specific circumstances.

A good valuation will normalize your earnings. If you've been running personal expenses through the business, those get added back. If you're paying yourself below market rate, that gets adjusted. The goal is to show what the business actually earns when operated by a professional buyer.

For smaller businesses under $5M in value, you'll likely see Seller's Discretionary Earnings (SDE) as the valuation basis. . SDE includes your salary plus any discretionary expenses you can add back.

For larger businesses, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) becomes the standard. This measures the business's profitability independent of financing and tax structure.

Step 1: Get Your Financials in Order

This is non-negotiable. Buyers want clean books. That means accurate profit and loss statements, balance sheets, and cash flow reports going back at least three years. If your bookkeeping is a mess, hire a real accountant or use proper accounting software now.

Specifically, you need to separate personal expenses from business expenses. I've seen founders tank deals because they were running personal dinners and travel through the business account. Buyers get nervous when they can't tell what's legitimate business spend and what's lifestyle.

Move from cash accounting to accrual accounting if you haven't already. Accrual accounting gives a more accurate picture of your business performance and is what sophisticated buyers expect to see. Make sure your revenue recognition policies are consistent and defensible.

Track your key metrics obsessively. For a SaaS business, that's Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), churn rate, Customer Acquisition Cost (CAC), Lifetime Value (LTV), and Net Revenue Retention (NRR). For service businesses, it's monthly revenue, gross margin, client retention rate, and average project value. Whatever your business model, know your numbers cold. Buyers will ask, and if you fumble, they'll assume you're hiding something.

Make sure your tax returns match your financial statements. Discrepancies between what you told the IRS and what you're telling buyers will kill deals instantly. If you've been aggressive with tax minimization, be prepared to explain and document every add-back you're claiming.

Step 2: Build Systems That Work Without You

Here's what kills most deals: the business is too dependent on the founder. If you're the one doing all the sales calls, managing every client relationship, and making every decision, the business isn't sellable-it's a job.

Start delegating and documenting. Write down your processes. Create standard operating procedures for every critical function. Hire people who can run day-to-day operations. Build a management team or at least key employees who know how things work. The goal is to demonstrate that the business can run without you being involved in every detail.

I made this mistake with my first company. I was doing everything, and when buyers did their due diligence, they realized the revenue would drop the second I left. That killed my valuation. By my third exit, I had systems in place, a team that could operate independently, and I barely touched daily operations. That business sold for a much better multiple.

Document everything. Your sales process, your fulfillment procedures, your customer service protocols, your vendor relationships-all of it should be written down in a way that someone new could follow. This isn't just about making the business sellable. It's about making it scalable and valuable.

If you're the primary salesperson, start transitioning that role at least a year before you plan to sell. Hire someone to handle sales, train them thoroughly, and let them build their own relationships with prospects and customers. Buyers want to see that your revenue isn't dependent on your personal charm or network.

I learned this lesson the hard way when I was $40,000 in debt after a startup collapsed. The "CEO" I was working with turned out to be running a phantom company-he was also Kevin the COO, Jeff the content creator, and four other "employees." I had closed over $1 million in deals in under 6 months, but he wasn't delivering any work and vanished with all the money. That rock bottom moment taught me that the most valuable asset in any business isn't the founder-it's the systems. If your business can't run without you, you don't have a business to sell.

Understanding Different Buyer Types

Not all buyers are created equal, and understanding who might want your business changes how you prepare and position it for sale. There are three main categories, and each has different motivations and payment capabilities.

Strategic buyers are companies in your industry or adjacent markets who want to acquire your customer base, technology, or team. They typically pay the highest multiples because they can extract synergies. For example, if you run a marketing agency and a larger agency acquires you, they can merge operations, eliminate duplicate overhead, and increase profit margins. They might also want your proprietary processes, your client relationships, or access to a market they haven't penetrated. Strategic buyers often have the most capital available and can move faster than other buyer types because they understand your business model.

Financial buyers are private equity firms or investment groups. They're looking for cash flow and return on investment. They usually pay lower multiples than strategic buyers but can move faster and have more capital available. Financial buyers typically want businesses with predictable revenue, strong margins, and growth potential. They're less interested in synergies and more interested in whether your business can stand alone and generate consistent returns. If you're doing between $1-5M in revenue, you might attract smaller financial buyers or family offices.

Individual buyers are entrepreneurs looking to buy a business instead of starting from scratch. These deals are often smaller and may involve seller financing, where you get paid over time instead of all upfront. Individual buyers are buying themselves a job, so they care deeply about whether they can operate the business successfully. They'll scrutinize your operations more carefully and want more hand-holding during the transition.

Figure out which type makes the most sense for your business size and model. If you're doing under $1M in revenue, you're probably looking at individual buyers. Between $1-5M, you might attract financial buyers or smaller strategic acquirers. Above $5M, you have more options including private equity and larger strategic buyers.

Step 3: Build a Buyer List and Start Outreach

You can hire a business broker or M&A advisor to find buyers, or you can do it yourself. I've done both. . That's significant money, but they have networks and can handle negotiations. If you go solo, you save the fee but you do all the work.

Understanding broker fees helps you decide whether to hire one. . For larger businesses in the lower middle market ($1M-$25M revenue), many brokers use the Double Lehman formula, which charges declining percentages on different portions of the sale price.

The advantage of a broker isn't just finding buyers-it's managing the process, maintaining confidentiality, qualifying prospects, and negotiating terms. A good broker has seen dozens of deals and knows how to navigate due diligence and closing. They also provide air cover so you can keep running your business while the sale process happens.

If you're going the DIY route, start building a list of potential acquirers. Look at competitors who might want to eliminate you or acquire your customer base. Research companies that have acquired similar businesses in the past-they're proven buyers. Identify private equity firms that invest in your space by looking at industry publications and deal databases.

You need contact information for decision-makers: CEOs, corporate development heads, or partners at PE firms. Tools like ScraperCity's B2B database can help you build targeted lists by industry, company size, and job title. For finding specific email addresses, an email finder tool can locate contact information for the exact decision-makers you need to reach.

Your outreach should be direct but not desperate. You're not begging someone to buy your business-you're presenting an opportunity. I usually send a short email explaining what the business does, key metrics (revenue, growth rate, profit), and why I think there might be a strategic fit. Keep it under 150 words. If they're interested, they'll ask for more details. Don't dump your entire CIM (Confidential Information Memorandum) in the first email.

Before sharing detailed information, get an NDA (Non-Disclosure Agreement) signed. This protects your confidential business information and gives you recourse if someone steals your ideas or customer lists.

Here's what most people get wrong about outreach to buyers: they wait for referrals instead of proactively building a pipeline. I've seen agencies relying on referrals add millions in revenue in under 6 months just by sending a few dozen emails per week. One $20 million agency I worked with could have become a $60 million agency using this approach. The same principle applies when you're selling your business-if you're only talking to one or two interested parties who came through your network, you're leaving massive value on the table. Build a list of 50-100 potential buyers and reach out systematically.

I made a video about closing deals faster that applies directly to selling your business:

The key insight: create urgency by giving buyers a reason to move now. When they say "let's talk in April," respond with "it takes two weeks to transition properly, so we need to close by next week to hit your April timeline." This turns their delay into a reason to accelerate.

Creating Your Confidential Information Memorandum (CIM)

Once you have interested buyers, you'll need a professional document that presents your business. This is called a Confidential Information Memorandum or CIM. Think of it as a pitch deck for selling your business.

Your CIM should include an executive summary that hits the highlights-what the business does, key financial metrics, why it's a great acquisition opportunity. Include a detailed business overview covering your history, business model, products or services, target market, and competitive positioning.

Financial information is critical. Include three to five years of historical financial statements, clearly showing revenue, expenses, and profitability trends. Provide detailed breakdowns of revenue by product line, customer segment, or service offering. Show your growth trajectory and explain any anomalies or one-time events that skew the numbers.

Market opportunity matters to buyers. Show them the total addressable market, industry trends, and growth projections. Explain your competitive advantages-what makes your business defensible and hard to replicate.

Include information about your team, especially key employees who will stay post-sale. Describe your operational systems and technology infrastructure. Highlight your customer base without revealing specific names at this stage-aggregate data about customer retention, average contract value, and purchasing patterns.

Make the CIM professional. Use clean design, clear charts and graphs, and proofread everything carefully. Typos and sloppy formatting signal that your business might be equally disorganized.

Step 4: Prepare Your Due Diligence Package

Once you have interested buyers, they'll want to dig into everything. This is called due diligence, and it's where most deals either solidify or fall apart. .

Prepare a data room with all your key documents. Use a secure platform like Dropbox with restricted access, Google Drive with proper permissions, or a dedicated virtual data room service. Organization matters-. The faster you can provide information, the more momentum you maintain.

Your due diligence package should include financial statements for at least three years-income statements, balance sheets, and cash flow reports. . Include tax returns for the same period. Provide detailed breakdowns of accounts receivable and payable, debt schedules, and any off-balance-sheet liabilities.

Legal documents are equally important. Include your articles of incorporation, bylaws, operating agreements, and any amendments. Provide all customer contracts, vendor agreements, employment contracts, and partnership agreements. Document all intellectual property-trademarks, patents, copyrights, domain names, and any licensing agreements. Include insurance policies, pending litigation information, and regulatory compliance documentation.

Operational documents help buyers understand how the business runs. Provide employee handbooks, organizational charts, compensation structures, and benefits information. Include customer lists with aggregate data (not individual names yet), sales and marketing materials, product documentation, and operational procedures.

The cleaner and more organized your data room, the more confident buyers will feel. Disorganization signals that you might be hiding problems or that the business is chaotic. I literally create a checklist and make sure every document is labeled clearly and easy to find. Use a consistent naming convention and logical folder structure.

Expect buyers to ask tough questions. They'll want to know about customer concentration, why certain customers churned, what your competitive advantages are, and what risks exist. Be honest. Lying or hiding problems will come back to bite you, either by killing the deal or leading to legal issues post-sale. If there are problems, address them head-on and explain what you've done or plan to do to mitigate them.

Understanding the Letter of Intent (LOI)

If a buyer is serious, they'll send you a Letter of Intent. This is a non-binding document that outlines the key terms of the deal before anyone spends serious money on legal fees and extensive due diligence.

The LOI typically includes the proposed purchase price and how it's structured-how much cash at closing, whether there's seller financing, and if there are any earnout provisions. It outlines the basic deal structure (asset sale vs stock sale), the expected timeline to closing, and any major conditions that must be met.

Pay close attention to how you're getting paid. All-cash upfront is ideal but rare for smaller deals. More common is a mix of cash at closing, seller financing (you get paid over 2-5 years), and earnouts (you get additional payments if the business hits certain targets post-sale).

Earnouts require special attention because they're risky. . In theory, earnouts let you capture upside if the business performs well after the sale. In practice, you no longer control the business, so hitting those targets depends on the buyer's decisions.

. The problem? The buyer controls operations during the earnout period. They can slash marketing budgets, change pricing, redirect resources-all things that might hurt your earnout targets. And if you're working for them during the earnout period, you have limited leverage to push back.

I've done deals with earnouts and deals without. My advice: get as much cash upfront as possible. Don't bet your payout on what happens after you leave. If you do accept an earnout, make sure the terms are crystal clear about how performance is measured, what accounting methods will be used, and what happens if the buyer makes major changes to the business. Better yet, negotiate for the earnout to be based on revenue rather than profit, since profit can be manipulated more easily.

The LOI also typically includes an exclusivity period-usually 60-90 days-where you agree not to shop the business to other buyers while this buyer completes due diligence. This is standard, but don't agree to excessive exclusivity periods. If a buyer wants 180 days of exclusivity, that's a red flag that they're not serious.

Seller Financing: What You Need to Know

Many business sales include some component of seller financing, where you act as the bank and the buyer pays you over time. .

Why would you do this? Sometimes it's the only way to get the deal done, especially if the buyer can't secure full bank financing. Other times it's strategic-it shows confidence in the business's future performance and keeps you invested in a smooth transition.

. The interest rate should reflect the risk-you're taking on credit risk that a bank wouldn't accept.

Protect yourself if you agree to seller financing. . A substantial down payment means the buyer has real skin in the game and is less likely to walk away.

. Require regular financial statements so you can monitor the business's health. If possible, negotiate for personal guarantees from the buyer.

Understand that seller financing subordinates you to other lenders. If the buyer also has bank financing, the bank gets paid first if something goes wrong. Make sure you're comfortable with that risk level.

Negotiating the Purchase Agreement

The purchase agreement is the legal document that governs the sale. This is where you need a good M&A lawyer-not your general business lawyer, but someone who specializes in business acquisitions and has closed dozens of deals.

The purchase agreement includes representations and warranties-these are promises you make about the business. You'll warrant that the financial statements are accurate, that there's no undisclosed litigation, that you own all the assets you're selling, that customer contracts are valid and transferable, and that you're not aware of any material problems.

These reps and warranties matter because they create liability exposure. If something you warranted turns out to be false, the buyer can sue you for damages. That's why you need to be brutally honest during due diligence. Document everything, disclose everything, and don't make promises you can't keep.

The purchase agreement also includes indemnification clauses-what happens if something goes wrong. Typically, sellers agree to indemnify buyers for breaches of representations and warranties up to a certain dollar amount and for a certain time period. Buyers will push for broad indemnification with high caps and long survival periods. You want narrow indemnification with low caps and short survival periods.

Negotiate a materiality threshold-sometimes called a basket or deductible. This means the buyer can't come after you for every tiny issue; losses have to exceed a certain amount (often $10,000 or $25,000) before indemnification kicks in. Also negotiate a cap on your total indemnification liability, often 10-20% of the purchase price.

The agreement will specify the closing conditions-what needs to happen before the deal closes. Common conditions include successful due diligence, bank financing approval (if applicable), key customer or vendor consent, regulatory approvals, and lease assignment if you're in a leased space.

During negotiations, you're going to hear pushback-that's just part of the process. Early in my career, someone told me an email I sent was "the worst they'd ever read." They still booked a call, lectured me about it, then bought anyway. The lesson? Criticism doesn't mean failure. When a buyer pushes back on your terms or valuation, don't take it personally and don't immediately cave. Ask yourself why they're objecting-is it a real concern or a negotiating tactic? Use that feedback to refine your position, but trust that if you've built a solid business and prepared properly, the deal will work out.

The Due Diligence Period: What to Expect

After you sign the LOI, the buyer has 60-90 days to complete full due diligence. They'll bring in accountants, lawyers, and sometimes consultants to verify everything you told them.

This is stressful. They'll ask for more documents, interview your team, talk to your customers (with your permission), and scrutinize every line item in your financials. Stay responsive and cooperative. Delays and resistance make buyers nervous.

Financial due diligence involves accountants reviewing your books in detail, often conducting a Quality of Earnings (QoE) analysis. They're looking for accounting irregularities, unusual transactions, revenue recognition issues, and whether your claimed add-backs are legitimate. They'll verify that your customer contracts are real and that revenue is as stable as you claim.

Legal due diligence means lawyers reviewing every contract, permit, license, and legal document. They're checking for pending lawsuits, regulatory violations, IP ownership issues, and environmental liabilities. They'll verify that you have the right to sell what you're selling and that all necessary consents can be obtained.

Operational due diligence involves the buyer understanding how the business actually works. They might interview key employees, visit your facilities, review your technology infrastructure, and assess your vendor relationships. They want to confirm that the business can continue operating smoothly after the transition.

Some deals die in due diligence. . Common reasons deals fail: the buyer discovers revenue is declining, a major customer is about to churn, there's a pending lawsuit you didn't disclose, or the financial records don't match what you claimed.

This is why you need clean books and honesty from the start. Every issue that surfaces during due diligence erodes trust and gives the buyer leverage to renegotiate price or walk away entirely.

Closing the Deal

If due diligence goes well, you'll move to closing. Your lawyer and the buyer's lawyer will finalize the purchase agreement with all the specific terms you've negotiated.

Expect to stay involved for at least 30-90 days post-sale. Most buyers want you to train the new team, introduce them to key customers, and make sure nothing breaks during the transition. Some deals include longer consulting periods where you're paid to remain available. This isn't optional-it's usually a condition of closing.

The transition period is critical. How you handle it affects whether the buyer considers the deal successful, which matters if there are earnouts or if you might work with them again. Be professional, be available, and genuinely try to make the transition smooth. Answer questions fully, introduce the new owner warmly to customers and vendors, and don't badmouth the business or the buyer.

On closing day, money changes hands (or at least the first payment if there's seller financing or earnouts), and you sign a mountain of paperwork. The purchase agreement, bill of sale, assignment agreements, non-compete agreement, consulting or employment agreement if applicable, and various other documents.

Celebrate, but don't go silent. Honor your transition commitments. Your reputation matters, especially if you plan to start another business and sell it later. The business community is smaller than you think, and buyers talk to each other.

Tax Implications of Selling Your Business

Selling a business has major tax implications that can significantly impact your net proceeds. Consult with a tax advisor early in the process-ideally months before you start marketing the business for sale.

The structure of the sale affects your tax liability. An asset sale typically results in higher taxes for the seller because different assets are taxed at different rates. Equipment might be taxed as ordinary income to the extent of depreciation recapture. Goodwill and intangibles are usually taxed at long-term capital gains rates, which are lower. Inventory is taxed as ordinary income.

A stock sale is generally better for sellers from a tax perspective because the entire gain is taxed at capital gains rates. However, buyers usually prefer asset sales because they get a step-up in basis for depreciation purposes. This is a common negotiation point-buyers push for asset sales, sellers want stock sales.

The allocation of the purchase price among different asset categories matters enormously. Make sure your purchase agreement specifies how the price is allocated, and that both parties agree to report it the same way to the IRS. Discrepancies will trigger audits.

If you're taking seller financing or earnouts, the tax treatment can be complicated. . This spreads out your tax liability over multiple years, which can be advantageous. However, .

Consider the timing of the sale relative to your personal tax situation. Selling in a year when you have other income might push you into a higher bracket. Spreading the sale across two tax years might reduce your overall tax burden.

Look into tax deferral strategies like Opportunity Zones if you're selling real estate, or 1031 exchanges for certain types of assets. Consult with a tax professional who specializes in business exits-the money you spend on good advice will pay for itself many times over.

Common Mistakes to Avoid

Don't wait until you're burned out to sell. Buyers can smell desperation, and you'll make bad decisions when you're exhausted. Plan your exit when things are going well, not when you're in crisis mode. The best time to sell is when the business is growing, profitable, and you still have energy to manage a professional sale process.

Don't overvalue your business. I get it-you've poured years into this thing. But buyers don't care about your effort, they care about cash flow and return on investment. Get a realistic valuation and price accordingly. Overpriced businesses sit on the market forever, and the longer you're on the market, the more buyers assume something is wrong.

Don't try to sell a business that's declining. If your revenue has been dropping for six months, fix that before you go to market. Buyers pay premiums for growth, not decline. A turnaround story is much harder to sell than a growth story, and you'll get crushed on valuation.

Don't skip legal and accounting help. Yes, it costs money. But a good M&A lawyer and accountant will save you from mistakes that cost way more than their fees. I've seen founders lose tens of thousands-sometimes hundreds of thousands-because they tried to DIY the legal docs or didn't structure the deal properly from a tax perspective.

Don't neglect the business during the sale process. It's tempting to take your foot off the gas once you have interested buyers, but if your numbers drop during due diligence, buyers will renegotiate or walk. Keep running the business hard until the deal actually closes.

Don't make verbal promises that aren't in the written agreement. Everything needs to be documented. If you promise the buyer something during negotiations, make sure it's in the purchase agreement. Verbal agreements are worthless and will come back to haunt you.

Don't ignore red flags about the buyer. If they're slow to respond, constantly changing terms, asking for excessive seller financing, or pressuring you to close without proper due diligence, be wary. Some buyers are tire-kickers who enjoy the process but never actually close. Others are unsophisticated and will create problems during the transition. Trust your gut.

The biggest mistake I see is business owners who think they need everything perfect before they start the sales process. That's the same myth that exists in Silicon Valley-that you need expensive infrastructure and full development before you launch. I've watched entrepreneurs build $3,000 software tools with freelancers, then use cold outreach to get to $3,000 in monthly revenue within weeks. The same applies to selling your business: you don't need a perfectly polished company to start conversations with buyers. Start the outreach process earlier than feels comfortable, get feedback from the market, and improve as you go.

Maintaining Confidentiality During the Sale Process

One of the trickiest parts of selling a business is maintaining confidentiality. If your employees, customers, or vendors find out you're selling, it can create major problems.

Employees might start looking for new jobs, worried about what new ownership means. Customers might pause contracts or start looking at competitors, uncertain about continuity. Vendors might change terms or stop extending credit. Competitors might use the information against you, telling your customers that you're unstable.

Use code names in documents and emails. Don't hold meetings at your office where employees might see. Be vague with your management team until you have to tell them. When you do tell key employees, do it carefully and with assurance about their future.

Work with buyers to control the flow of information. Limit customer calls and site visits until you're close to closing. When customer calls do happen, frame them as routine relationship-building rather than due diligence for a sale.

Have a communication plan ready for when the deal closes. How and when will you tell employees, customers, and vendors? What will you say? How will you reassure people that it's good news? The buyer should be involved in crafting this message since it affects their success.

The Role of M&A Advisors and Brokers

Whether to hire an advisor or broker is one of the first decisions you'll make. The right choice depends on your deal size, complexity, and how much time you can dedicate to the process.

Business brokers typically work with Main Street businesses (under $1M revenue) and lower middle market deals ($1M-$5M revenue). They list your business, find buyers, manage the process, and handle negotiations. . For this fee, they should provide valuation support, buyer outreach, deal management, and closing coordination.

M&A advisors work with middle market deals ($5M+ revenue) and provide more sophisticated services. They conduct extensive valuation work, create professional marketing materials, run competitive bid processes, and negotiate complex deal terms. Their fees are typically lower as a percentage but higher in absolute dollars because they work with larger deals.

The advantage of hiring professionals isn't just about finding buyers. It's about managing a complex process while you keep running the business. A good advisor provides air cover-they handle buyer questions, manage due diligence, negotiate terms, and keep the deal moving forward. They've seen dozens of transactions and know how to navigate problems that would derail a first-time seller.

Advisors also bring credibility. A professionally marketed business with a quality CIM and a known advisor behind it gets taken more seriously than a founder sending cold emails. Buyers know the numbers have been vetted and the process will be professional.

The downside is cost. On a $2M sale, a 10% commission is $200,000. That's real money. You have to decide whether the higher sale price, faster process, and reduced stress justify the fee. In my experience, a good advisor usually pays for themselves through higher valuations and better terms.

If you do hire an advisor, interview several before choosing. Ask about their experience with businesses like yours, their success rate, their process, and their fee structure. Get references and actually call them. Understand exactly what services are included and what costs extra. Make sure you have good chemistry-you'll be working closely with this person for months.

What Happens After You Sell

Closing the sale isn't the end of your involvement. Most deals include a transition period where you help the new owner take over successfully.

This transition is usually 30-90 days of active involvement, sometimes longer if you're staying on as an employee or consultant. You'll introduce the new owner to key customers and vendors, train them on operational systems, transfer knowledge about the industry and competitive landscape, and be available to answer questions.

This period can be emotionally challenging. It's weird to watch someone else run the thing you built. They'll make different decisions than you would. They might change things you considered sacred. You have to let go and trust that you sold to someone capable.

If you have an earnout, the transition period is even more critical because your future payments depend on the business's performance. You need to balance helping them succeed while accepting that you no longer control decisions. This tension is why earnouts often lead to disputes.

After the transition, think about what's next. Some founders immediately start another business. Others take time off to travel or pursue hobbies they'd neglected. Some invest their proceeds and retire. There's no right answer, but having a plan helps with the psychological adjustment.

Understand that selling a business is a major life transition, not just a financial transaction. You might feel relief, loss, excitement, and grief all mixed together. That's normal. Give yourself time to process before making big decisions about what comes next.

Resources to Help You Prepare

If you're running an agency or service business and want to scale it before selling, grab my 7-Figure Agency Blueprint. It covers the systems and strategies I used to grow businesses to the point where they were attractive acquisition targets.

For client acquisition and sales systems that increase your valuation (predictable revenue is huge for buyers), check out the Discovery Call Framework. Buyers love businesses with repeatable sales processes that don't depend on the founder's personal network.

If you want hands-on help navigating an exit or building a sellable business, I work through this stuff in detail inside Galadon Gold, where we tackle real growth and exit challenges.

Alternative Exit Strategies Beyond Traditional Sales

Selling to a third-party buyer isn't the only exit option. Depending on your situation and goals, other strategies might make more sense.

Management buyouts (MBOs) involve selling to your existing management team. This works when you have strong managers who want to own the business and can secure financing. The advantage is continuity-the people running the business already know it intimately. The downside is that management usually can't pay as much as outside buyers, and you'll likely need significant seller financing.

Employee Stock Ownership Plans (ESOPs) allow you to sell to your employees collectively through a special trust structure. ESOPs offer significant tax advantages and can be great for maintaining company culture and employee loyalty. However, they're complex to set up, work best for businesses with at least 20 employees and $1M+ in EBITDA, and the valuation process is rigorous.

Passing the business to family members is common for family-owned businesses. This keeps the business in the family and can provide for the next generation. The challenges are emotional-family dynamics complicate business decisions-and financial-family members might not be able to pay full market value, leaving you reliant on the business's continued success.

Recapitalization involves selling a majority stake to private equity while you retain a minority stake and continue running the business. This gives you liquidity now while letting you participate in future upside. It's common in the $5M-$25M EBITDA range and works when you want some chips off the table but aren't ready to fully exit.

Liquidation-shutting down the business and selling the assets-is the option of last resort. You'll get the least money this way because assets sell for pennies on the dollar and there's no value attributed to ongoing operations. But sometimes it's the only option for a declining business with no interested buyers.

Building a Business That's Easy to Sell

The time to think about selling isn't when you decide to exit-it's from day one. Businesses built with an eventual exit in mind are more valuable and easier to sell.

Focus on recurring revenue. Subscription models, retainer clients, and maintenance contracts create predictable cash flow that buyers value highly. One-off project revenue is worth less because it's not guaranteed to continue.

Document everything. Systems, processes, vendor relationships, customer knowledge-all of it should be written down. A business that lives in the founder's head is worth significantly less than one with transferable processes.

Diversify your customer base. No single customer should represent more than 10-15% of revenue. Customer concentration is one of the biggest red flags for buyers because it creates risk that one lost customer tanks the business.

Build a management team. Even if you're still making big decisions, having competent people in key roles shows that the business can operate without you. Start delegating earlier than feels comfortable.

Keep clean books from the start. Use proper accounting software, separate personal and business expenses, and reconcile monthly. Don't wait until you're ready to sell to clean up your financials-the historical record matters.

Protect your intellectual property. Register trademarks, document proprietary processes, and have employment agreements that assign IP to the company. Make sure contractors sign IP assignment agreements too.

Maintain good legal hygiene. Keep corporate records updated, maintain proper insurance, stay compliant with regulations, and resolve any legal issues quickly. Undisclosed legal problems kill deals.

Track the right metrics. Know your customer acquisition cost, lifetime value, churn rate, gross margin, and other key indicators for your business model. Businesses with clear metrics are easier to value and sell.

If you're building a business with the intent to sell, think about scalability from day one. When you rely purely on referrals, you're building a business that's hard to scale and hard to sell. But when you master outbound-whether that's cold email or systematic buyer outreach-every customer you land can deliver three or four more referrals because you're actively pushing that angle. I've seen this create exponential growth: if you're doing $10,000 deals and sending effective emails, you can generate $20,000+ in new business per hundred emails sent. That kind of predictable, repeatable revenue system is exactly what makes a business attractive to buyers.

Final Thoughts

Selling a business is part art, part science, and a lot of preparation. The founders who get the best outcomes start planning years in advance, build businesses that can run without them, and go into negotiations with clean financials and realistic expectations.

I've been on both sides of these deals-as a seller and as someone evaluating acquisitions. The difference between a smooth exit and a nightmare is almost always preparation. Do the work upfront, be honest throughout the process, and don't fall in love with a number. Focus on the total package: how much you're getting, when you're getting it, and what you're committing to post-sale.

Understand that selling a business is more than a financial transaction. It's the culmination of years of work, sacrifice, and vision. Take it seriously, but also recognize that it's the beginning of your next chapter, not the end of your story.

The market rewards preparedness. Businesses with clean books, documented systems, diversified revenue, and honest founders sell for premium multiples. Businesses with messy financials, founder dependency, and hidden problems get crushed on valuation or don't sell at all.

If you're serious about selling, start now. Clean up your books, document your systems, and build a business that's worth buying. Hire professionals who've done this before-a good M&A lawyer, a tax advisor who understands business exits, and potentially a broker or advisor to manage the process. Their fees are small compared to what you lose by going it alone.

Most importantly, be honest. With buyers, with advisors, with yourself. The truth always comes out in due diligence. The businesses that command the best terms are the ones where the seller has nothing to hide and can back up every claim with documentation.

Your exit is your final act as a founder. Make it count. Do it right, and you'll walk away with the cash you've earned, the satisfaction of a job well done, and the freedom to pursue whatever comes next.