Business Brokering Buy Sell Business – Worldwide Business Brokers

Selling a Business: 4 Critical Steps

Selling a Business: 4 Critical Steps

6 February 2023: Selling a Business: 4 Critical Steps

As detailed in last week’s post, selling a business requires preparation. But what does that mean, specifically?

The preparation phase of selling a business is broad and deep. And we shouldn’t expect it to be any different. Selling a business is, in almost all instances, the most significant financial event in the business owner’s life. Not being prepared – and that includes understanding the process down to the most seemingly insignificant detail – substantially increases the risk of an unpleasant process and an unhappy seller. In many cases, it results in complete failure.


We offer a comprehensive coaching program  – both group coaching in our Brokers’ Roundtable community as well as one-on-one coaching – tailored to Realtors, business owners, buyers and anyone interested in valuing, buying or selling a business.

If you’d like to learn more, email me at jo*@Wo*******************.com


But the preparation phase involves many aspects and is far too complex to cover in one post (and there are a number of additional posts on this blog that address the issue) but this post describes four central issues that a business owner should focus on – and business brokers should advise their clients accordingly.

And for those wondering, professional business brokers can perform or assist with all of these issues.


Most business owners know their business and the industry their business is in. Few, however, are knowledgeable about businesses and industries they have no experience in; like selling a business. But it surprises us how many business owners decide to take on the job themselves. (I hope they never need a kidney replacement and come to that task with a similar mindset!)

The following points are for business owners and for business brokers advising such owners

Where to start with your research? Knowing what the business is worth.

Understanding a business’ value is critical on multiple levels.

  • It will help determine how to price the business. Offering the business at a price that’s lower than its value, means leaving money on the table. Pricing it above its value could easily result in it never selling.
  • It will allow the owner to see if the proceeds of the sale will be enough to support whatever they plan to do post-closing. From sailing around the world or endowing a professorial chair at the alma mater, to starting another business or simply planning pickle ball tournaments at the retirement community of the owner’s choice, every post-closing day entails some costs.


Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses, teaches you how to accurately value and successfully sell businesses.


Every legitimate buyer – and even many of the illegitimate ones – will want to see an enormous amount of documentation. They want to know what they may be buying. Get this aspect organized before you start the selling process or it will cause significant business disruption if you have to stop running the business when a buyer shows up and this stuff isn’t ready, easily accessible and easily understood. Unclear, disorganized or unavailable documentation will cause many legitimate buyers to head for the door.

Here are the basics:

  • Financial statements – operating (profit and loss) statements for 3-5 years; YTD and three previous year-end balance sheets; bank statement.
  • Tax returns for the most recent three years.
  • Copies of all contracts and leases the business is a party to.
  • Lists of vendors and customers/clients
  • Loan documents
  • Accounts payable and receivable.

There’s much more to this and we do a deep dive in our flagship Course. (We’re also developing several smaller courses to address individual aspects of this process. If you’re interested in learning more about these smaller, specialized courses, let me know.)

The Right Team

There are three critical positions to fill on the team and you want to fill them with people with the right talent for the job.

  • Accountant: an absolute necessity to assure the business owner keeps as much of his or her hard-earned money as possible. If you believe (as I do) that the capital received by the seller at closing would be put to better use by the seller than if that capital was sent to Washington, DC, London, Paris  or any other intellectual fiscal wastelands where money goes to vaporize and where knuckleheads of the first rank have blown (in the U.S.) billions on such critical programs as: $1.5 million spent studying fish on treadmills; $1.7 million spent on a comedy club featuring dead comedian holograms; $3 million spent studying the Jaws theme and people’s perception of sharks; $2.4 million spent by the Department of Defense to learn how to get more “Likes” on social media; and $3.4 million spent on hamster cage matches – just to name a few of the more brilliant – a good tax accountant is critical. (Source: Americans for Prosperity.)
  • A TRANSACTION Attorney: Not your divorce attorney, your “get-my-reckless-driving-infraction-reduced-to-simple-speeding” attorney or your ambulance-chasing brother-in-law. What’s needed is someone with experience in the mergers and acquisitions space. Need help finding one? See next bullet point. (Can we still use the word “bullet” in modern day America?)
  • Professional business broker. Somebody who makes their living doing exactly what the business owner needs done. From marketing, buyer-vetting, preparation of documents (see next item), maintaining confidentiality, responding to inquiries, negotiating agreements, contoling due diligence, lining up potential lenders, herding all the cats to the closing table, an experienced broker can keep all the balls in the air.

The Marketing Piece(s)

In order to sell a business – or a car, a house, a refrigerator or a HIMARS missile system – you’ve got to have what’s often referred to as “collateral pieces”.

In our business, we develop what we term an “offering memorandum” for every business we bring to market. In our Course, we show business brokers (and, yes, real estate agents) how to craft this pivotal 20-40 page document. We actually provide a redacted version in the Course of one that we did for a lender in the financing of a $12 million deal.

Some people refer to such a document as a Confidential Information Memorandum (CIM), a Confidential Business Offering (CBO), an Information Memorandum (IM) or simply the “book on the business”. But whatever you want to call it, it must be comprehensive and provide pretty much everything a potential buyer needs to know to make a decision. Yes, the buyer will still want to perform due diligence but the objective of our Offering Memoranda is to make due diligence nothing more that a confirmation process – confirming the information contained in the Offering Memorandum.

But the need for confidentiality demands that we can’t just send out the Offering Memorandum willy-nilly. Some preliminary informative document is a must. We prepare and use what we refer to as an “abstract”. (A redacted version is also provided in the Course.)

Call these docs what you will but if you’re serious about selling a business, you’ve got to have them.

Here are two examples of how people in related fields – the types of people we work with – characterize the packages we put together:

“The financial analysis that Worldwide Business Brokers provides on the businesses they represent is not only the most comprehensive I have ever seen prepared by a business broker but the analysis also gives the prospective buyer a jump start on preparing loan applications for acquiring the business and financial plans for running the business.”– James Wilson, Principal, Wilson Law Group

“The Offering Memoranda that Worldwide Business Brokers generates when bringing a business to market is by far the best we’ve seen. I wish other intermediaries and M&A firms were as professional.”– David Moore. SBA loan originator

The Bottom Line

The most effective process of selling a business – and the best way to assure not only a successful effort but also the chance to get the best value – starts long before the business actually gets brought to market.

We still have business owners – for example, those suffering from new, onerous government regulations or employees being enticed to leave by Walmart’s new generous minimum starting wage – come to us on a Tuesday saying they decided last night to sell. We still have real estate agents who’ve been unsuccessful over the previous 18 months in finding a buyer for a business they listed (at a price the seller, who is clueless about value, said he wanted) come to us asking for help.

In such instances, the clients are already unhappy and we’re going to have a tough time changing that.

When a business owner understands the need for preparation and the need for the right talent, both the process of preparation and the process of selling are much more likely to be done right and result in success.

I’d like to hear from you. What topics would you like me to cover? How can we tailor these posts to be more useful to you and your business. Let me know in the comments box, below, or email me at jo*@Wo*******************.com.

If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.

I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.


Searching For…

We’ve been contacted by a small lower middle-market investment company seeking U.S.-based opportunities in home services (property management, HVAC, plumbing, pest control, pet boarding, etc.) and B2B services (marketing, HR, facilities management, fire safety, etc.). They’re looking for recurring customer relationships and discretionary earnings of between $1 million and $5 million.

If any of you know of something that might fit, please let me know.


#business #businessacquisition #sellabusiness #becomeabusinessbroker #businessbrokering #businessvaluation #MergersandAcquisitions #buyabusiness #sellabusiness #realtor #realestateagents


The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 500 in the world. He can be reached at jo*@Wo*******************.com

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