Businesses come and businesses go. They are founded, bought, sold, merged, spun off and sometimes end up in bankruptcy. In most of these cases, there are a series of steps that need to be taken and questions that need to be asked. Knowing what to ask (and when to ask it) is key for anybody who wants to know how to sell a business.

Why Sell a Business?

There are many reasons you would want to sell a business. These include the following:


You may simply have reached the age where it’s time to slow down and take things easier. Or perhaps you’ve decided to stop working altogether, and maybe move to another area.

Ending A Partnership

Partnerships can be fragile relationships, and sometimes it’s better to split up with a partner and move on, rather than trying to force things to work. In some instances, it’s better for a partnership business to be sold, and not carry on under duress.

Illness or Death

You may be in ill health, and wanting to step off, or you’re selling the business of a deceased family member. In both instances, these are legitimate reasons to sell.

Too Much Work

Sometimes, too much work isn’t a good thing. If you own a business and it grows, it may not be as pleasurable for you anymore. Instead of doing the kind of work you envisioned when you started the business, it suddenly becomes lots of paperwork, people management and financial work.

Time To Move On

A lot of times, entrepreneurs get bored, and if you’re that type, you might want to cash out and start your next venture. Especially if the business sticks around for a few years and it becomes stagnant for you, it’s time to move on to the next challenge. For many of those types, the journey to success is more satisfying than the destination.


There are obviously many things to take into consideration when it comes time to sell your business, such as a “selling a business checklist,” if you will. These include the following:

  • – Timing of the sale: Timing is everything, and getting all your ducks in a row for things to flow smoothly during the process is key.
  • – Business valuation: This is finding out how much your business is worth on the open market. You don’t want to lowball your price or start too high to price yourself out of contention.
  • – Preparing and acquiring the proper documentation: Naturally, there are a lot of moving parts in a business, both financial and otherwise, and having the correct documents prepared is vital. These include tax and other financial records, inventory of supplies that are to be included in the sales, any sales figures, pending contracts, legal matters, and intellectual property.
  • – Using a broker and finding a buyer: A broker is a middleman between the seller and the buyer, and naturally, the broker is going to take a cut of the sales. A good broker will also help find a buyer and may have connections in the industry that will help them expedite the sale.

Questions to Ask during the Process

Obviously, there are scores of questions that should be asked before and during the sales process. Some of the most important ones include the following:

1. Should I use a broker? 

As mentioned above, a broker is a good resource for helping find a buyer, but the broker also takes a percentage of the sale (10% – 12%, perhaps). Similar to selling a house, the broker will have a large network of potential buyers.

2. How do I value the business?

Again, a third-party expert is your best bet here. Having an objective third party write up a valuation will help both the buyer and seller agree on fair market value.

3. How much will it cost to sell the business?

Adding the two factors above into the mix, you will probably have other expenses, such as the preparation of tax and financial statements, legal fees, marketing fees, any improvements that must be made before the sale, and the cost of due diligence and the expenses of dealing with the sales process, which includes a virtual data room (VDR).

4. Should I sell to a competitor?

This is a valid question, and in the big picture, selling to a competitor should be no different than selling to another party, except that there obviously must be strong non-disclosure agreements (NDAs) instituted at the outset of the deal.

5. Can I sell the business quickly?

As you probably gathered from the previous questions, rushing through the process should be avoided. However, the more prepared and flexible you are, the faster the entire process should go.

6. What about selling a franchise?

Depending on what franchise you own, you may have to go through the franchiser in order to get the green light to sell, along with any other stipulations that were agreed upon when you bought the franchise.

7. Can I sell my share of a business?

In the small business world, it’s a typical type of sale to “cash out” and sell your share of the business to your partner (or partners). If there is an agreement in place, then the process is easier. However, in most instances, a sale to somebody already involved in the business eliminates many of the aforementioned steps, as opposed to selling to a stranger.

How To Sell a Business

There are a large number of steps to cover in the selling process of any business. These include the following.

Determining Exit Strategy

No matter what the reason, deciding that you’re planning on moving on is the first step. Once you’ve determined it’s the correct course of action, finding a broker or business advisor to guide you through the process is key.

Boosting Business Value

Similar to selling a house, take an unbiased look at the business. Are there things that can be addressed that will boost value? We’re not talking about major corporate initiatives, only things that can be done simply and quickly.

Evaluating the Business

This is definitely where you would want a third-party professional to help you put a price tag on the company. Chances are that you’re too close and involved to make an accurate determination on the overall value.

Performing Due Diligence

A buyer will want full transparency, so taking the time to unpack all the details of the finances and other issues that will affect the value of the company is mandatory. This includes not only financial, but legal matters, contracts, inventory and intellectual property (IP), among other items.

Finding the Appropriate Buyer

This is where a broker earns their pay. Whether you’re selling to a new face or a competitor, a broker has it in their best interest to get you the maximum bang for your buck, as their fee almost always is a percentage of the final sale.

Establishing Transition Structure

Knowing exactly what assets are held by the company is also part of the sale process. Some investments held by the company may not have any impact on the business going forward, and they can be omitted from the deal. Same goes with employees and management; it depends if the employees and management plan on staying with the new owners, or if the new owners plan on retaining all (or some) of the existing employees.

Negotiating the Deal

This is where the fine points of the deal are hammered out. In some instances, potentially valuable items may not be of interest to the buyer; on the other hand, the buyer (or seller) may want certain terms or concessions in the deal through negotiation.

Finalizing the sale

This is where the lawyers, bankers and other professionals are needed to confirm that all terms and conditions have been met by both the buyer and the seller.

Where a Virtual Data Room Fits into Things

A virtual data room (VDR) is a crucial tool during the entire process of selling a business. A VDR is a secure, online location where both the buyer and seller can store and share the documentation that is required for the transaction. It allows all parties to review financial and other confidential documentation in a secure, online location. 

A VDR provides secure access with encryption, customizable digital rights management (DRM), along with version and document control. CapLinked, a leader in the VDR space, provides secure virtual data rooms for all types of business sales transactions. CapLinked VDRs feature a user-friendly interface that is compatible with virtually every OS, and, because of that, it gives users the ability to upload and download documents from virtually any type of computer, tablet or smartphone from anywhere around the globe. 

Start a free trial to learn more about how CapLinked can help smooth out your M&A process with a free trial.

Chris Capelle is a technology expert, writer and instructor. For over 25 years, he has worked in the publishing, advertising and consumer products industries.