Answers
Questions about selling and buying a business in the US
Short, factual answers to the questions owners, buyers and advisors ask most often. Each section links to the page that covers the subject in full.
Selling a business
How do I sell my business in the USA?
Recast your financial statements, establish a defensible valuation range, decide between an owner-run sale and a broker-assisted sale, prepare a blind profile and an information memorandum, market confidentially behind a non-disclosure agreement, qualify buyers on funds and background, negotiate a letter of intent, complete due diligence and close on a purchase agreement.
How do I sell my business confidentially?
Publish only a blind profile that describes the industry, region, revenue band and earnings without naming the company. Release the identity, financial detail and customer information only after a signed non-disclosure agreement and buyer qualification, and keep every document in a controlled vault with access logged per buyer.
How do I sell a business without employees or customers finding out?
Keep the company unnamed in all public marketing, restrict internal knowledge to the people who need it, hold buyer meetings off site or outside business hours, release staff-identifiable information late in diligence, and agree the announcement plan with the buyer before signing.
How long does it take to sell a business?
For a prepared lower-middle-market business, a full process commonly runs several months from launch to close: preparation, confidential marketing, buyer qualification, letter of intent, due diligence and closing. Unclean financials, customer concentration and lender timelines are the most common causes of delay.
Can I sell my business without a broker?
Yes. A direct owner sale is a normal route when the owner has time, clean financial records and access to buyers. The owner then carries the work of marketing, buyer screening, information control and negotiation, usually with a transaction attorney and CPA engaged for the legal and tax elements.
How do I find a buyer for my business?
Buyers come from four pools: individual owner-operators, search funds, private equity platforms making add-on acquisitions, and strategic acquirers already operating in your sector or an adjacent geography. A marketplace listing reaches the first two efficiently; the last two are usually reached by identifying and approaching named companies.
Valuation, SDE and EBITDA
How is a small business valued?
Most owner-operated US businesses are valued as a multiple of normalized earnings — seller's discretionary earnings for smaller companies and adjusted EBITDA for larger ones — with the multiple set by industry, size, growth, recurring revenue, customer concentration and how dependent the business is on the owner. Asset-heavy and real-estate-inclusive deals are then adjusted for the value of the assets conveyed.
What is SDE?
Seller's discretionary earnings is pre-tax net profit plus one owner's compensation and benefits, interest, depreciation, amortization and non-recurring or personal expenses. It represents the total financial benefit available to a single full-time owner-operator and is the standard earnings measure for smaller owner-operated businesses.
What is EBITDA?
EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted or normalized EBITDA additionally removes non-recurring items and restates owner compensation to a market-rate salary, which makes it the standard earnings measure once a business runs with management in place.
What is the difference between SDE and EBITDA?
SDE includes one owner's compensation as a benefit to the buyer; EBITDA treats management as a cost and excludes it. The same business will therefore show a higher SDE than EBITDA. SDE multiples are correspondingly lower, and mixing the two measures with the wrong multiple is a common valuation error.
What multiple will my business sell for?
The multiple depends on the earnings measure used, the industry, the size of earnings, the growth trend, revenue quality and transferability. Larger, less owner-dependent businesses with recurring revenue and diversified customers price at the top of their range; owner-dependent businesses with concentrated customers price below it.
What is the difference between asking price and enterprise value?
An asking price is the amount advertised for the business, usually stated on a cash-free, debt-free basis with a normal level of working capital included. Enterprise value is the agreed value of the operating business before adjusting for cash, debt and working capital at closing, and the final cash to the seller is set by those adjustments and the deal structure.
Buying a business
How do I buy a business?
Define an acquisition thesis covering industry, size, geography and your operating role, review listings and off-market opportunities, sign a non-disclosure agreement to receive detail, review the information memorandum and financials, submit a letter of intent, complete due diligence with your accountant and attorney alongside financing, and close on a purchase agreement.
How do buyers finance business acquisitions?
Common sources are buyer equity, bank or SBA-guaranteed debt, a seller note, an earnout tied to future performance, and equity from private equity or search fund investors. Most lower-middle-market transactions combine several of these rather than relying on a single source.
Can SBA financing be used to buy a business?
SBA-guaranteed loan programs are commonly used by US buyers to acquire small businesses, subject to lender approval and SBA eligibility rules covering the business, the buyer and the transaction structure. Eligibility is determined by the lender and the SBA, not by a marketplace listing, so confirm it early with a lender experienced in acquisition lending.
What is a strategic buyer?
A strategic buyer is an operating company acquiring another business for commercial reasons such as market entry, added capacity, customer access or product range. Strategic buyers can justify a higher price where the combination creates savings or revenue that a financial buyer would not obtain.
What is a financial buyer?
A financial buyer — such as a private equity fund, family office, search fund or individual investor — acquires a business primarily for its cash flow and return profile, and prices the deal on earnings, risk and financing capacity rather than on synergies.
What is an add-on or bolt-on acquisition?
An add-on, or bolt-on, is an acquisition made by an existing platform company to expand its geography, service range or capacity. Add-on buyers are often the most motivated acquirers of well-run owner-operated businesses in fragmented industries.
What is an off-market acquisition?
An off-market acquisition is the purchase of a business that is not publicly advertised for sale. Buyers reach these opportunities by identifying companies that fit an acquisition thesis and approaching the owner directly, usually before a formal sale process starts.
Business brokers
What does a business broker do?
A business broker prepares a privately held company for sale, sets a defensible asking price, markets it confidentially, screens and qualifies buyers, manages the non-disclosure agreement and information release process, and coordinates the deal from letter of intent through due diligence to closing. In the lower middle market the same role is often described as an M&A advisor or business intermediary.
How much does a business broker charge in the USA?
Most US business brokers work on a success fee taken from the sale price at closing, and many lower-middle-market M&A advisors also charge a monthly or upfront work fee that covers preparation and marketing. Fee levels vary by deal size, complexity and market, so ask for the fee schedule, the minimum fee and the engagement term in writing before signing.
What is the difference between a business broker and an M&A advisor?
The terms overlap. 'Business broker' usually describes advisors handling owner-operated main street businesses, while 'M&A advisor' or 'M&A intermediary' usually describes advisors handling lower-middle-market companies where buyers include private equity platforms, search funds and strategic acquirers, and where deal structure is more complex.
Do I need a business broker to sell my business?
No. An owner can run a confidential sale directly using a structured process, professional documents and a marketplace for buyer reach. A broker adds buyer screening, negotiation experience and process management, which matters most when the owner has limited time or the transaction is complex.
How do I choose a business broker?
Compare relevant transaction experience in your industry and size range, the marketing and buyer-screening process, who will actually run the file day to day, references from completed sales, the full fee schedule and the length and termination terms of the engagement.
Are business brokers licensed in the United States?
Licensing depends on the state and on the transaction. Some states require a real estate license for business sales involving real property, and transactions structured as securities can require a registered broker-dealer. Confirm what a specific advisor is licensed to do in your state before you engage them.
NDA, CIM, LOI and due diligence
What is an NDA in a business sale?
A non-disclosure agreement is the confidentiality contract a prospective buyer signs before receiving the identity, financial detail and operating information of a business for sale. It typically also restricts contact with employees, customers and suppliers and limits use of the information to evaluating the transaction.
What is a CIM?
A confidential information memorandum is the main sale document for a privately held business. It sets out the business model, market, customers, operations, management, recast financial statements and growth opportunities in enough depth for a qualified buyer to form a view on price and structure.
What is a blind profile or teaser?
A blind profile, also called a teaser, is the short anonymous summary published to the market. It states industry, region, revenue band, earnings and key highlights without naming the company, so the business can be marketed without disclosing that it is for sale.
What is an LOI?
A letter of intent records the main agreed terms of a proposed transaction — price, structure, treatment of cash, debt and working capital, financing, timetable and exclusivity — before due diligence begins. Most terms are non-binding, while confidentiality, exclusivity and expense clauses are usually binding.
What happens during due diligence?
The buyer verifies what was represented: quality of earnings and financial records, tax filings, customer and supplier contracts, employment and benefits, licenses and permits, litigation, leases, insurance, systems and, where relevant, the condition and title of real estate.
What is the difference between an asset sale and a stock sale?
In an asset sale the buyer purchases specified assets and assumes specified liabilities; in a stock or equity sale the buyer purchases the ownership interests and takes the company with its history. The choice affects tax treatment, contract and license transferability and liability exposure, and should be modeled with a CPA and attorney before the letter of intent is signed.
How is the purchase price usually paid?
A lower-middle-market purchase price is commonly a combination of cash at closing, bank or SBA-guaranteed debt, a seller note, rollover equity where the seller retains a stake, and an earnout linked to defined future results. The mix determines how much of the price is certain at closing.
Business sales including real estate
What happens when real estate is included in a business sale?
The operating business and the property are valued separately and then combined into one transaction. The business is priced on normalized earnings with a market rent charged against those earnings, and the property is priced on its own value, which prevents the same income being counted twice.
Can I sell my business and keep the property?
Yes. Many owners sell the operating business and retain the real estate, granting the buyer a lease. The lease term, rent, renewal options and assignment rights then become part of the deal, because a buyer's lender will look at whether occupancy is secure for the life of the loan.
What is owner-occupied commercial real estate?
Owner-occupied commercial real estate is property used by the business that operates in it, commonly held in a separate entity owned by the same principals. It is treated differently from investment property in both valuation and acquisition financing.
How is SBA 504 different from SBA 7(a) in an acquisition with property?
The SBA 7(a) program is generally used for the acquisition of the operating business and can include real estate in the same loan, while the 504 program is directed at owner-occupied real estate and long-lived equipment. Structure, terms and eligibility are set by the lender and the SBA, so confirm the route before pricing the deal.
How is a business with real estate valued?
Charge market rent to the business, value the business on the resulting earnings, value the property on comparable sales and income, then present the combined figure. Buyers and appraisers will separate the two values again, so a combined multiple that hides the property value tends to fail in diligence.
Using SellMyBiz.com
What is SellMyBiz.com?
SellMyBiz.com is presented as a US business-for-sale marketplace and transaction platform for business owners, buyers and business brokers, covering confidential listings, valuation tools, professional sale documents, non-disclosure and document controls, buyer discovery and deal workflow. This site is a demonstration and is not currently trading.
Is SellMyBiz.com a business broker?
No. As shown here it is software and a marketplace, not a brokerage. It does not act as an intermediary, does not hold brokerage or lending licenses in any US state, and does not provide legal, tax, valuation or financial advice.
What is the difference between a DIY sale and a broker-assisted sale here?
In an owner-run sale the owner uses the platform to prepare documents, list confidentially, control information release and manage buyer conversations directly. In a broker-assisted sale a US broker on the platform is engaged separately by the owner and runs the same process on the owner's behalf under their own engagement terms.
Are the listings and broker profiles on this site real?
No. Every listing, broker profile, dashboard, document, community discussion and signal shown is fictional and provided to demonstrate the platform.
General information about US market practice, not legal, tax, accounting or lending advice. Requirements vary by state and by transaction. SellMyBiz.com is a marketplace and software platform, not a brokerage or a lender.