Owner's guide
How to sell your business, step by step.
Written by two people who buy businesses, not by a listing site trying to sign you up. This is the whole arc, from the first quiet question to the day your team hears the news, with real market data at each step.
By James Penz & Thu Ra, Paradosi Partners · Updated 2026-07-16
The six steps, in brief
- 01
Get a grounded idea of what your business is worth
Before talking to anyone, anchor on broker-reported market data. IBBA Market Pulse data puts businesses selling for $2M to $5M at a median of about 4 times adjusted earnings, and $5M to $50M businesses at about 5.3 times. Your position in the range depends on recurring revenue, customer concentration, and how much runs without you.
- 02
Decide who should know, and lock down confidentiality
The standard sequence protects you: anonymous conversations first, a mutual NDA before anything identifying, and phased information sharing. Employees typically learn at close. Never let a buyer talk to employees, customers, or vendors without your explicit permission.
- 03
Choose the kind of buyer you actually want
Individual buyers made up roughly 44 percent of lower-middle-market purchases in recent IBBA data; private equity roughly 20 percent; the rest strategics and others. Each type pays differently and changes the business differently after close. Decide what matters to you beyond price: employees, name, legacy, your own exit timeline.
- 04
Get the offer in writing as a letter of intent
A serious buyer will put price, structure, and what happens to your team on paper within weeks, not months. Broker-reported medians show sellers at this size receiving roughly 80 to 90 percent of the price in cash at close. Treat heavy earnouts with caution: SRS Acquiom data shows they historically pay out only a fraction of the headline number.
- 05
Survive diligence without losing your company's attention
Lender underwriting typically runs 60 to 90 days after a signed LOI. Good buyers work off-site and off-hours and treat diligence as confirmation, not a second negotiation. If a buyer re-trades the price over small findings, that tells you who they are.
- 06
Close, and tell your people the right way
The market norm is a same-day announcement at close, from you, with the buyer in the room, with the message agreed in advance. Plan the first day: what employees hear, what customers hear, what changes (usually almost nothing) and what stays the same.
Start with the question nobody asks out loud
Most guides start with valuation. The better starting point is simpler: what do you want to be true a year after the sale? Some owners want the highest possible number and a clean break. Many more, when it comes down to it, want the team employed, the name on the building, and a fair price. Knowing which owner you are determines everything else: the buyer you pick, the structure you accept, and how you run the process.
It also determines whether you should sell at all right now. In IBBA survey data, a majority of sellers at this size are owners at or near retirement age. If that's not you, and the business still has room to grow, partnering with an operator first and selling later is a real path that most listing-driven processes never mention.
Know the market numbers before anyone quotes you one
Small businesses are valued on adjusted earnings: seller's discretionary earnings (SDE) below roughly $2M in price, EBITDA above it. The most recent IBBA Market Pulse medians run about 2 times SDE for businesses under $500K, around 3.3 times SDE at $1M to $2M, about 4 times EBITDA at $2M to $5M, and about 5.3 times EBITDA from $5M to $50M. Pepperdine's Private Capital Markets research finds recast EBITDA multiples are the method used by roughly three quarters of appraisers and intermediaries.
A buyer who quotes you a rich number before seeing any financials is not valuing your business. They are pricing your attention. The honest version is a range, tied to data you can check, that survives your CPA's scrutiny.
Run a quiet process, not a public one
Confidentiality is not paranoia; it is asset protection. Employees, customers, and competitors all change their behavior when they hear a business might sell. The standard protective sequence: no identifying information before a mutual NDA, financials in stages, and employees told at close rather than during the process. A buyer who resists any of this early is showing you how they will handle sensitive things later.
Broker, banker, or direct?
A good broker or M&A advisor earns their fee by creating competition, and BizBuySell's 2025 data shows brokered listings taking a median of roughly five and a half months just to find the buyer. A direct conversation with a known, credible buyer compresses the front of the process to weeks. Neither path is automatically right. If maximum price through auction is the goal, use an intermediary. If confidentiality, speed, and fit matter most, a direct conversation costs nothing to have first. Either way, have your own attorney and CPA at the table from the LOI onward.
What the timeline really looks like
From a serious first conversation to close, roughly three to five months is realistic when financing goes smoothly: a few weeks to an NDA and a written range, weeks three to six to a signed letter of intent, then 60 to 90 days of lender underwriting and diligence. Add months if the business is being listed publicly first. Promises of a 30-day close at this size deserve skepticism, not excitement.
The parts that are about you, not the business
Two questions catch owners off guard. First: how long will you stay? The practical norm is a transition measured in weeks to months, agreed in writing before close, and shaped by how much of the business lives in your head. Second: what will Monday feel like when it's no longer yours? Sellers consistently report that the emotional weight lands after close, not before. Choosing a buyer you actually trust with your people is what makes that weight bearable.
Reading is free. So is the conversation.
Thirty confidential minutes with the people who wrote this guide. No documents, no obligation, and an honest read even if the honest read is that we are not your buyer.