Sell My Business: A US Owner's Guide
How to sell a business in the United States: what it is worth, who the real buyers are, how the process runs stage by stage, what it costs, and the preparation that changes the price.
A plain account of how a profitable American company actually gets sold. What determines the price, which buyers pay the most, how long each stage takes, and the preparation that is worth more than any negotiation.
How do I sell my business?
establishing a defensible earnings figure, preparing the company so that figure survives diligence, approaching the specific buyers who pay the most for a company like yours, and running several of them in parallel to closing
. For a profitable lower middle market company the full process usually runs six to twelve months, and the price is set far more by preparation than by negotiation.
Most owners start in the wrong order. They ask what the multiple is, then look for a broker, then discover in diligence that the earnings figure they were quoted on will not hold. The order that works is the reverse: prove the earnings, fix what a buyer will discount, then go to market once, to the right people, from a position where nothing new can be found.
What the price attaches to
Buyer types", value: "Strategic acquirers, private equity platforms, search funds, management
Where value is won", value:
Each stage has a purpose and a failure mode. The failure modes are more instructive than the milestones, because that is where deals lose price or fall over.
Establish what the business is worth, honestly
Rebuild the earnings the way an acquirer will: owner compensation restated to market, related-party rent restated, personal expenses itemized, one-off items removed in both directions. The number that comes out of that exercise is the number a buyer will pay a multiple of. A valuation built on reported profit alone is a guess.
Fix what a buyer will discount
Customer concentration, unsigned or unassignable contracts, owner dependence, missing management information, deferred fleet or equipment replacement. Several of these take twelve to twenty-four months to resolve and each is worth more than anything achievable at the negotiating table.
Decide the transaction structure you can live with
All cash at closing, a rollover of equity into the buyer's platform, a seller note, an earn-out, a period of continued employment. The headline price means very little until you know how much of it is paid at closing and what has to happen for the rest.
Build the materials: A blind profile that identifies nothing, a confidential information memorandum that answers the questions a buyer would otherwise ask in diligence, and a data room populated before the first conversation rather than after the first request.
A blind profile that identifies nothing, a confidential information memorandum that answers the questions a buyer would otherwise ask in diligence, and a data room populated before the first conversation rather than after the first request.
Approach the right buyers, in parallel
The buyers who pay the most for a compliance-led or contracted-revenue business are national platforms and private equity backed consolidators, and they are not browsing listing sites. They are approached directly. Running several at once is what creates the tension that sets the price.
Run offers against each other to a letter of intent
Compare offers on cash at closing, not on headline value. A letter of intent normally grants exclusivity, so the moment it is signed your leverage falls sharply. That is the point to have negotiated structure, working capital mechanics and the diligence timetable, not later.
Quality of earnings, legal, insurance, environmental and customer reference calls, typically sixty to ninety days. The seller's job here is speed and consistency. Every delay and every inconsistency invites a price conversation the buyer would not otherwise have had.
The single largest driver in field service and compliance businesses. Revenue under a written, assignable agreement with indexation is valued differently from the same dollars re-won every year, because the buyer is purchasing a schedule rather than a sales effort.
Customer concentration: A customer above roughly ten to fifteen percent of revenue rarely removes earnings, but it changes the multiple and it pushes structure toward an earn-out. Buyers are pricing the risk that the relationship was personal to you.
A customer above roughly ten to fifteen percent of revenue rarely removes earnings, but it changes the multiple and it pushes structure toward an earn-out. Buyers are pricing the risk that the relationship was personal to you.
Whether the business runs without you
A company where the owner sets pricing, holds the client relationships and signs off technically is a job, not an asset. A general manager who has been in place long enough to be tested is worth a visible amount at closing.
Each adjustment with an invoice, a board minute or a settlement agreement behind it. A single round-number adjustment described as owner discretionary expenses is removed in diligence and costs you the multiple applied to it.
Financial reporting a buyer can rely on
Monthly management accounts that reconcile to the tax returns, margin by revenue line, a working capital history. Their absence does not just lower confidence, it hands the buyer the ability to set the working capital target from their own analysis.
Who you are actually talking to
The same company sells for materially different amounts to an individual buyer, a regional operator and a national platform executing a stated acquisition strategy. Buyer selection is a pricing decision, not an administrative one.
The state of the market you sell into
Credit conditions and the acquisition appetite of the active consolidators in your sector move prices, and neither is within your control. This is an argument for being ready when the window is open rather than starting when it is.
A round number you have in your head
Does not change the price. A target that is not supported by the earnings and the comparable evidence extends the process, exhausts the credible buyers and usually ends in a lower outcome than a properly run process would have delivered.
Earnings rebuilt and evidenced twelve months before going to market
Concentration and contract weaknesses identified early and fixed
Management depth tested by the owner being genuinely absent
A shortlist of named buyers with stated acquisition criteria
Several parties run in parallel through to final terms
A data room populated before the first buyer conversation
Advice on structure and tax taken before a letter of intent is signed
A multiple heard at a trade show applied to reported profit
One buyer, usually the one who approached first, granted exclusivity early
Customer concentration disclosed in week four of diligence
Add-backs assembled during the review rather than before it
The owner still holding every client relationship at closing
Structure negotiated after exclusivity, when leverage has gone
A sale started in reaction to illness, a dispute, or a tired year
A realistic schedule for a prepared lower middle market company. Businesses that begin preparation at the point of going to market repeat the first two rows while the rest of the timetable waits.
3 to 18 months, depending on what is found
The preparation row is the only one an owner genuinely controls, and it is the one that moves the price. Everything after the letter of intent is signed is about protecting a number that was largely determined before any buyer saw the business.
How much is my business worth?
Value is set by applying a multiple to a defensible earnings figure, then adjusting for cash, debt and a working capital target. Smaller owner-operated companies are usually priced on seller's discretionary earnings, and companies with a management team on adjusted EBITDA. The multiple depends on how much of the revenue is contracted, how concentrated the customer base is, how dependent the business is on the owner, and which buyers are active in that sector. A written valuation that rebuilds the earnings the way a buyer will is the only reliable starting point.
How long does it take to sell a business?
Six to twelve months from going to market to closing is normal for a prepared company. Preparation itself can take considerably longer, because the issues that most affect price, such as customer concentration and owner dependence, cannot be fixed in a quarter. The single biggest cause of an overrun is a seller producing records during diligence rather than before it.
Should I sell to a competitor?
Often the competitor pays the most, because they can see the revenue synergy and they already understand the market. The risk is informational: a competitor who walks away has learned your margins, your customers and your pricing. The answer is process discipline rather than avoidance. A blind profile first, a confidentiality agreement before anything identifiable, customer names withheld until late, and several parties in the process so no single competitor holds the outcome.
What does it cost to sell a business?
The main costs are advisory fees, legal fees, and any accounting or tax work commissioned during the process. Advisory fees in the lower middle market are typically a retainer plus a success fee expressed as a percentage of value, with the percentage falling as value rises. Ask for the fee schedule in writing, including what happens if the deal does not close and how the fee is calculated on deferred consideration such as an earn-out.
Do I have to tell my employees?
Not at the start. Confidentiality is maintainable through most of a well-run process: buyers see a blind profile first, nothing identifiable is released before a confidentiality agreement is signed, and management meetings are held off site. Key employees are usually involved late in diligence, because a buyer will want to meet the people who will run the business. The point at which your team learns should be a decision you make, not an accident.
Is it better to sell the assets or the shares?
Buyers usually prefer an asset purchase, for the stepped-up tax basis and the liability protection. Sellers usually prefer an equity sale, for the cleaner break and often the better tax treatment. The gap between the two is a price conversation rather than a principle, and it should be settled before a letter of intent is signed rather than in the documentation. Take advice from your own tax counsel on your specific position.
What should I do first?", answer:
Find out what the business is likely to be worth today and which specific factors are suppressing that figure. Several of them take a year or more to fix and are worth more than anything achievable in negotiation. The free written valuation report rebuilds your earnings the way an acquirer will, and it commits you to nothing.
Selling a Business in the US
Sell-side M&A advisory for US owners of profitable lower middle market companies, covering valuation, preparation, buyer approach and closing.
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Questions owners ask before they start
A free written valuation report rebuilds your earnings, prices your recurring revenue separately, and shows the specific factors holding your multiple down. It is the sensible first step before any of the work on this page.
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