7. Selling a Business
The Stage in Brief
Selling is the searcher's last stage and an owner's whole errand, and both meet the same buyer. A business is worth what it earns without you, financed by a bank that has never met you, so the work starts with recasting: separating personal spending from the business's real economics, then paying for the parts of the operation that exist only because you do them. Preparation is the rest of it. Concentrated customers, undocumented processes, a key employee with no contract, and books that need explaining each cost a multiple rather than a conversation. Who buys matters as much as what they pay: an individual with an SBA loan, a competitor, and a consolidator want different things and pay in different shapes, and the seller note is usually where the price actually lives.
Score Your Sellability
What a buyer will discount in your business, scored before they find it themselves.
Where the Paths Diverge
- Traditional
- Your investors and the board decide when to sell, and the equity waterfall decides what the sale actually pays you.
- Self-Funded
- You own all of it, and the personal guarantee follows you until the loan is retired at closing, so the sale is your entire return rather than a share of one.
- Employed
- The firm owns the business and runs the sale; your share is whatever carry the firm agreed, not the proceeds.
Questions to Answer Before Moving On
- What is the business worth without me running it?
- Which of my costs come back out in a recast, and which will not survive scrutiny?
- Can a bank finance a buyer for this business at the price I want?
- Do I want an individual owner-operator, a competitor, or a consolidator?
- How much of the price am I carrying, on what terms, and behind whose loan?
Mistakes That Cost Searchers Months
- Going to market with books an accountant has to explain
- Pricing off a multiple heard at a conference rather than the trade's own band
- Letting one customer stay large enough to become the diligence finding
- Treating the seller note as a formality when it is most of the negotiation
What the Data Says
Most buyers at this size arrive with a bank behind them, and the bank sets the ceiling: the median SBA change-of-ownership loan in FY2025 was $700k, across 7,533 closings. A price your earnings cannot carry as debt service does not narrow the buyer pool, it empties it.
A buyer who will not stand behind the counter subtracts a manager's pay from your earnings before applying any multiple: the median United States general and operations manager earns $105,770 a year. At a 3x multiple that is over $300,000 of price, and it is the most common gap between the number an owner has in mind and the offer they receive.
Source: Manager Wages (BLS OEWS)
Plan the calendar in months. Among the closed sales brokers reported to BizBuySell through full-year 2025, the median business took 135 days on market in Dallas-Fort Worth, 159 in New York, and 179 in Chicago. Those are one marketplace's voluntarily reported transactions rather than a national count, and they are the only published measure of the wait.
Source: BizBuySell Insight Report, full-year 2025 market tables
You will probably carry part of the price. Advisors closing deals in the fourth quarter of 2025 reported sellers averaging between 76% and 89% cash at close, and that figure counts the bank's money and the buyer's together, so the rest is yours to carry or defer. The note, its rate and whether it stands behind the lender are terms to negotiate rather than a surprise to react to.
Whether a bank will finance your buyer is partly decided by your trade's record: across the FY2018-19 change-of-ownership cohort of 10,387 SBA 7(a) loans, 3.35% have charged off, with the spread by industry running from near zero to over 10%. A trade at the wrong end of that spread is financed on tighter terms, and tighter terms land on your price.
The Playbook
Recast before anyone asks you to
A buyer is not buying your tax return, they are buying seller's discretionary earnings: the profit plus your compensation plus the costs that exist only because you own it. Do the recast yourself, with a document behind every add-back, a year before you list. The add-backs you cannot evidence are the ones a quality-of-earnings firm removes in week three, and a number that moves during diligence costs more than the number itself.
Price it off the trade's own band
Multiples are not general. The same dollar of earnings is worth several times more in one trade than another, and the band that applies to you is your industry's, at your size, in your region, not the figure quoted at a conference by someone selling something larger. Start from the published range for your trade, then argue your position inside it with evidence: recurring revenue, contract length, customer spread, and a management layer that survives your exit.
Fix the discounts a buyer will find
Every buyer runs the same list, so run it first. One customer over roughly a fifth of revenue, processes that live in your head, a key employee with no agreement, deferred maintenance, licenses held personally rather than by the company, and leases that end before the loan does. Each of these is priced as risk, and risk is taken off the multiple rather than off the earnings, which is why fixing them a year early pays several times what it costs.
Choose the buyer, not just the offer
An individual with an SBA loan pays a market price, needs the business to be financeable, and usually wants you to stay a while. A competitor pays for what it can eliminate and will learn everything about you during diligence whether or not it closes. A consolidator pays a structure rather than a price, often with equity rolled into the parent. The highest headline number and the most money you actually receive are frequently different offers.
Negotiate the note, because the price lives there
At this size a chunk of the price is usually a note you carry, and its terms decide what the deal is worth to you. Rate, term, and amortization matter less than two other things: whether the note sits on full standby behind the bank, and what security you hold if the business you sold stops performing. Model the proceeds at your actual terms rather than at the headline, and treat the standby requirement as a price term, because that is what it is.
Tools for This Stage
Resources for This Stage
Our picks for this stage are being verified: current pricing from primary sources, searcher feedback, and pros and cons. They publish here as each one clears.