How to sell a business
Selling a business is six stages, and the first one is longer than the other five combined. Most owners picture the process as finding a buyer and agreeing a price — that is stages three and four, and neither is where the outcome is decided. Deals are won in preparation and lost in due diligence, which are the two stages nobody pictures.
The six stages, and how long each really takes
| Stage | What happens | Realistic duration |
|---|---|---|
| 1. Preparation | Reconciling accounts, getting contracts signed and assignable, documenting processes, reducing dependence on the owner. | One to two years to do properly |
| 2. Valuation | Normalising earnings, establishing which metric applies, assembling the evidence for a price. | Weeks |
| 3. Going to market | An information memorandum, a shortlist of plausible buyers, NDAs before anything detailed is shared. | One to three months |
| 4. Offers and heads of terms | Non-binding outline of price and structure. Exclusivity usually starts here. | Weeks |
| 5. Due diligence | The buyer verifies everything. Legal, financial, commercial. | Two to four months |
| 6. Completion and handover | Contracts signed, funds move, the seller usually stays for an agreed period. | Weeks, then months of handover |
Note the shape: the two stages that consume the most calendar time are the first and the fifth, and they are the two that decide the price.
Stage one is the whole game
Everything a buyer will pay more for takes months to build and cannot be built during a negotiation:
- Accounts that reconcile. Bank statements to accounts, accounts to tax returns, revenue to the sales system. When those three disagree, everything else you say is treated as unverified.
- Customers contracted to the business. Not relationships held in the owner's phone. And ideally not concentrated: one customer at a large share of revenue is a single point of failure and is priced as one.
- Work that happens without you. Written processes, people trained on them, decisions that do not route through one person.
- Clean transferability. Contracts that can be assigned, a lease that survives a change of control, domains and software in the company's name rather than a personal account.
Each of those is ordinary administration if you start early. Each becomes the buyer's negotiating leverage if it is discovered in stage five.
Reading an offer: structure matters as much as the number
Headline price is the number owners repeat. It is rarely the money they receive. Read these three things before the total:
- Cash at completion — what actually arrives on the day. This is the only part that is certain.
- Deferred consideration — paid later, on a schedule. Certain only insofar as the buyer remains able and willing to pay.
- Earn-out — contingent on the business performing after you have left, often while you no longer control it. Treat this as possible income, not expected income.
Two offers with the same headline can differ enormously in what you actually bank. An offer with more cash at completion is usually worth more than a larger one weighted to an earn-out.
Why deals die in due diligence
Almost nobody loses a sale arguing about price. They lose it weeks later, when the buyer asks for the document supporting something already agreed and it does not exist.
What a buyer does when they cannot verify a claim is not walk away out of suspicion — they price the uncertainty, because they carry it after completion. That produces one of three outcomes, all bad for the seller: a reduction in price, a warranty or indemnity you have to give personally, or money moved out of completion cash and into an earn-out.
This is the same point as stage one, arriving late and expensively.
When a broker is worth the fee
Brokers are typically paid a retainer plus a percentage on completion. What they genuinely provide is real: access to buyers you would never find, a sense of what a normal deal looks like so you notice an unusual term, distance in the negotiation, and someone to manage the volume of diligence requests while you still run the business.
What they cannot do is fix an unprepared business. An owner-dependent company with accounts that do not reconcile receives the same discount whoever takes it to market — and the retainer has still been paid.
So the sequence matters: prepare first, then decide. A prepared business can be sold without a broker, or sold with one for more. An unprepared business gets the same result either way.
Arithmetic and general information only — not financial, tax, legal or investment advice. An actual sale needs a solicitor and an accountant, and your own figures decide what any of this means for you.
Do this sum for free
free business valuation calculator — it normalises your earnings, applies a range of multiples and shows the resulting range, so you go into stage two with a figure you can defend. It runs in your browser and nothing you type is sent anywhere.
If you would rather not build it yourself
The Business Sale Readiness & Valuation toolkit ($499) is a full valuation model with a sensitivity table across multiples, a weighted readiness assessment across the ten areas buyers examine, a preparation checklist and an adviser prep summary. One-time purchase, instant download.
Frequently asked questions
How long does it take to sell a business?
From going to market to completion is commonly six to nine months, with due diligence the longest part. Preparation before that takes one to two years if the aim is to improve the price rather than simply discover it.
Where do most business sales fall apart?
In due diligence. Not over price, but over claims that cannot be evidenced. Each unverifiable claim becomes a price reduction, a warranty the seller has to give, or money shifted from completion cash into a contingent earn-out.
Should I tell my staff I am selling?
Not early. Confidentiality protects the business you are trying to sell: staff, customers and suppliers learning before there is anything definite can damage trading and therefore the price. This is one of the reasons NDAs come before detailed information is shared.
Is the headline price what I receive?
Rarely. Look at cash at completion, deferred consideration and any earn-out separately. An offer with more cash on the day is often worth more than a larger headline weighted towards performance after you have gone.
Do I need a broker to sell my business?
No, but they provide buyer access, deal experience and negotiating distance that are hard to replicate. The decision is easier once the business is prepared: a prepared business can be sold either way, an unprepared one is discounted either way.
Sources
- Instilus: how to value a small business — checked 2026-09-24
- Instilus: SDE vs EBITDA, both formulas on one set of accounts — checked 2026-09-24