The Process of Selling a Business

By Phil Reese · May 17, 2018 · Updated June 26, 2026

So, you’re thinking of selling your business and riding off in to the sunset, but how do you do that? Here are the 8 basic steps in the selling process:

A picture showing Basic steps in the selling process

1. You make the decision to sell your company

Why do you want to sell? Are you burnt out and are ready for a change or just ready to retire? Or perhaps there are financial reasons and you need the money. Or is it because of personal health or family problems? Ideally you should begin getting ready to sell your business at least a year before you hope to close on the sale. Most Phoenix business brokers agree that it takes between 6 to 12 months to sell a company. Once you’ve made the decision, next determine a selling price.

2. You get a valuation of your business

Determining a reasonable selling price is a critical step in the sale process. You should come up with a realistic valuation, so that you and the buyer have similar expectations about your businesses value. Of course there are many factors involved that can affect the value, such as WHY you’re selling. For example a forced sale is likely to drive down the price. An owner-manager forced to sell because of ill health may have to accept the first offer that comes along. Enlisting the help of a professional who knows how to properly value a business is key.

3. You develop a Confidential Business Review (CBR)

A CBR contains all of the facts and figures about your business. Buyers will expect to see certain documents that show your business is profitable and a good investment. Below is a list of some of the documents you should collect in preparation for your sale:

Profit, Loss Statements & Balance Sheets for the current and past 3 years
Business tax returns for the past 3 years
A copy of your space lease with current landlord/management company contact information
Insurance policies
Business licenses
Detailed profile describing the business
Supplier and/or Customer contracts
Employment agreements
A list of current employees with their start date, pay rate, and duties
A list of your furniture, fixtures, and equipment with current fair market values
Approximate value of on-hand sellable inventory at your cost

4. You find potential buyers for your business (whether you use a business broker or sell it yourself)

As an established business owner, you may already know several individuals or companies that are interested in acquiring your business for either financial or strategic reasons. Instead of waiting for them to come to you, be proactive and reach out to targeted buyers to gauge their interest. For some small business owners, the most satisfying way to exit the business is to sell it to their employees. Finding a good qualified buyer is one of the most time-intensive elements of the selling process.

5. You negotiate a price with potential buyers

Selling your business typically means two things: parting with something extremely emotional and realizing the value of your most valuable financial asset. These incredibly high stakes make this type of negotiation entirely unique. Some things to consider when negotiating: The price itself is not everything. Terms matter immensely i.e. how is the payout to be structured? Have a walk-away number with an understanding of the range of value you expect for the company. Make strategic concessions if you need to. Know who you are negotiating with, be familiar with the buyers true motivation. Do your homework. You should never walk into a negotiation without appreciating the buyer’s perspective. And finally, as negotiations progress, it’s easy to get tunnel vision. After all the time and effort spent, it’s hard to imagine walking away empty-handed. But sometimes that’s the best option.

6. The Buyer will conduct their Due Diligence

Once you and your business buyer negotiate the fine points of a deal and sign a letter of intent or purchase agreement, it’s time for the buyer to conduct their due diligence. During this process, the buyer will verify everything you have told them. Most buyers will have their CPA review all of your financials and tax returns to make sure you are really making the amount you claim. This process usually takes about 2-4 weeks. The seventh step is:

7. You close escrow and transfer the business to the buyer

Once the buyer has signed off on their due diligence and all other contingencies of the sale have been met, it’s time to schedule the sale closing. There are many documents involved including: escrow documents, loan documents, equipment lists, etc., many unique to a specific business. You will want to use the services of an escrow officer or an attorney. If you have a Scottsdale business broker, they will assist in all of this and also attend the closing.

8. You help train the new buyer to run your business

When you sell your business, it’s common practice to provide training for the new owner. The duration of the training period varies from one situation to the next. Training period details should be carefully outlined in the purchase agreement. Most sales include 2-4 weeks of training.

What Is My Arizona Business Worth?
Step two is the valuation. This is how it works in practice: Seller's Discretionary Earnings as the starting point, the add-backs that count and the ones a buyer will reject, the risk factors that set the multiple, and why revenue alone tells me very little.
How Do You Screen Buyers Before Sharing Confidential Business Information?
Step four, finding buyers, comes with a gate. This is how every inquiry is screened before anyone learns which business is for sale, the blind listing, the confidentiality agreement, the questionnaire, and proof of funds, and why most inquiries turn out not to be buyers.
How To Be Prepared For A Buyer’s Due Diligence
Step six is the buyer's due diligence. This is the preparation for it: the financial, legal, and asset records to gather ahead of time, from tax returns and leases to the shareholder agreements, so those two to four weeks do not turn into months while you hunt for documents.
How Are Business Acquisitions Financed?
Step five says terms matter as much as price. This explains the terms: all cash, a seller carry note, or an SBA loan, why cash buyers expect a discount, and why most deals include some seller financing with a substantial down payment and a note paid monthly over a few years.
Do I Need Help From a Business Lawyer To Sell My Company?
Step seven names an escrow officer or an attorney. This explains what a business attorney does across the whole sale, from keeping the buy-sell agreement in your favor to solving problems mid-deal, and lists the documents that need drafting before and after the offer.
Business for Sale: How Long Does It Take to Sell?
The six to twelve months quoted at step one is an average. This breaks the timeline down by asking price, how desirable the business is, the buyer type, their financing, and how independent the business is from you, so you can see which steps above take the longest.

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