Selling a Business in 2023



July 11, 2023

Selling a business can be a complex process, but it doesn't have to be daunting. Through efficient analysis and utilizing productive resources you can expect to execute a sale of your business in a timely manner at acceptable terms. Whether you are looking to sell your business to an individual, a group of investors, or a strategic partner, the CTA business brokers blog provides the advice and insights you need to ensure a successful sales transaction. We discuss all aspects of selling a business, including how to prepare for a business sale, how to maximize your business value, how to evaluate potential buyers, and how to manage the sales process and handle negotiations. Join us as we explore the different components of selling a business and guide you through the necessary planning, preparation, and execution of a successful business sale.

Preparing a Business for Sale

  • Business Records

When you're selling a business one of the most important items that need to be organized is your business records. They are critical for establishing the value of the business as well as presenting the company efficiently to the marketplace.  Depending on the business, records may include financial statements, tax returns, payroll and personnel records, inventory records, customer invoices, contracts, and lease agreements. Make sure to maintain accurate records for a minimum of the past three years when selling your business as your acquirer and potential financing source will request the same.  Having complete and organized records will help ensure a successful outcome and a smooth sales process.

  • Financials

When it comes to selling a business, the financials of the company can play a major part in the sale. The financials can provide insight into the company’s past history, projected profits, and overall condition. It is important to make sure that the financials have been thoroughly examined before making any decisions on a prospective business sale.  Having a clear understanding of the financials can help ensure that both yourself and the buyer can create the "win-win" scenario typically needed in a successful transaction.

  • Inventory Assessment

When you are selling a business it is important to take inventory. This means looking through every aspect of the business and assessing its current value. You should look at tangible assets such as buildings and machinery, as well as intangible assets such as patents, licenses, and customer databases. You should also review the company's financials to have a clear understanding of its true worth. Taking the time to do an assessment is vital for both buyers and sellers when planning a business sale. It will help both parties make informed decisions and ensure both parties receive a fair return when selling a business.

  • Legal Compliance

When it comes to legal compliance, it is important to consider the legal implications when you decide to sell a business. There are various requirements that must be met in order to ensure that the sale of a business is done properly and legally. This includes filing necessary paperwork with state and federal authorities, obtaining proper accounting and tax advice, and considering whether any contracts need to be transferred or terminated. Taking the time to ensure these steps are taken will ensure a smooth and legal transition when selling a business.

Setting the Sale Price

  • Fair Market Value

When selling a business, it is important for the seller to have an understanding of the fair market value of the company. Fair market value is the expected price of a business based on current market trends and conditions while considerin the unique circumstances and characteristics of the company.  Knowing the fair market value of a company is essential to ensure that both the buyer and seller of a business are able to negotiate and reach an agreement that is fair and equitable.

  • Industry Factors

Selling a business can be a complicated process especially when industry factors come into play. Businesses that operate within specific industries are subject to seasonal highs and lows, customer demands, shifting regulations, new trends in technology, cost of materials and supplies, and a variety of external variables.   

  • Realistic Expectations

When it comes to selling a business, it is important to have realistic expectations. While it is tempting to set a high sales price and look for quick offers this often leads to disappointment. Most quality acquirers will have market knowledge and have an idea of what the market will support for sale in a particular industry. It is best to do your research, consult with a business broker, and assess the market before setting a selling price for your business. By setting realistic expectations you will be able to maximize your chances of a successful business sale.

Finding the Right Buyer

  • Identifying Qualified Buyers

When it comes to selling a business identifying qualified buyers is essential.  The right candidate will have the management background, familiarity in an industry, and financial capacity to acquire a company.  Confidentiality is a high concern when selling your company and you do not want to overexposure your sales presentation with non-qualified prospects.  The key to identifying qualified buyers is through conversation, reviewing their employment background,  and analyzing their financial capacity for acquisition.

  • Initial Contact

When you first decide to sell your business, contacting a trusted professional who specializes in assessing and assisting with selling a business is the first step. Having an experienced business sales professional guide you through the process can save you time, money, and ultimately lead to a successful transition of the business. They will help you understand the value of your business, perform due diligence, and ensure that the entire process is handled efficiently and legally.   

  • Negotiations

Negotiations are an important part of selling a business. As an owner, you want to ensure that you get the best price & terms possible from a qualified buyer. During negotiations you should be prepared to discuss the financials of the business, the terms of the sale, and any contingencies that must be met.  With the appropriate preparation and understanding of the legal and financial aspects of a business sale you can ensure that you get the highest possible return on your investment.

Professional Advice

  • M&A Advisors

When it comes to selling a business working with a qualified mergers & acquisition advisor can have a huge impact on the success of the transaction. An advisor can help determine the value of a business and develop strategies to maximize the value of the sale. They can also offer guidance on topics that prevent companies from selling, identifying potential buyers, and preparing financial information and other key documents in support of the sale. A qualified advisor can also assist with negotiations and securing financing for the buyer should it be required. Finding the right advisor is key to ensuring a successful business sale.

  • Transaction Attorneys

It's also important to consult with a qualified transaction attorney as you move through the due diligence process to protect your interests.   An experienced  transaction attorney can provide you with guidance and help ensure you comply with both state and federal tax laws during the sale of your business. A transaction attorney can also help address any potential liability issues and ensure that you are protected from any potential liability post sale.  A referral to a transaction attorney can typically be provided by your M&A advisor.

  • Accountants

It is equally important to consult with a qualified accountant when moving through the sale process and or contemplating the sale of your business.  A qualified accountant can advise on the tax implications of the sale and provide analysis of the tax allocation which will be included in the sale legal document and needs to be agreed to by both parties in the transaction.


Summary of Selling a Business

When it comes to selling a business, the process can appear to be daunting with multi layers of complexity, but it doesn't have to be.  Planning and working with professionals experienced in business sales will make the process go smoothly, attract a qualified candidate, and ultimately lead to the successful sale of your company.  A successful business sale typically involves an assessment of the company, determining a price that the market will support for sale, and efficient negotiation to close the deal.  Working with an experienced mergers and acquisition firm will lead to a successful outcome. 

CTA business brokers is a leading Northwest mergers & acquisitions – business brokerage firm with the market knowledge, expertise, and transaction experience to effectively process and guide your business sale. We provide exceptional results for our clients.  Contact us to confidentially discuss your business and transition goals.

Choosing the right mergers & acquisitions – business brokerage advisor is important in your transition journey.

Contact a CTA expert today to confidentially discuss your business sale and transition goals.

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