The Process of Selling a Business
Every sale has its own details, but the essence of the process comes down to ten steps, handled with confidentiality from start to finish.
Confidentiality comes first
Premature news of a sale can cause understandable anxiety for employees and other stakeholders. By keeping the process confidential until the sale is complete, your team is spared that uncertainty, and the new owner can address everyone's concerns directly. In most cases the new owner keeps the employees, since they are among the business's most valuable assets.
The ten steps
Valuation
Step 1: Our Initial Meeting
We start with a free consultation to discuss your goals and learn about the business. It helps to bring some basic financial information, since reviewing it lets us answer many of your first questions right away.
Step 2: The Opinion of Value Report
A Seapoint professional reviews three years (sometimes more) of financial statements, plus anything else you find relevant. Using a market-based approach, we prepare an opinion of value report estimating the most probable selling price.
Step 3: Discussion of Value
We walk through the report with you. If it meets your expectations, we move ahead. If your expectations are above our estimate of market value, we give you feedback on how to reach your goals and what could help increase the value.
Marketing
Step 4: Confidential Information Memorandum
We draft a Confidential Information Memorandum (CIM) summarizing the history, financials, and operations of the business. It is shared only with buyers who have signed a confidentiality agreement.
Step 5: Marketing
We market the business discreetly to our buyer database and other proprietary exchanges using a generic description with no identifying information. Interested buyers, from private equity firms and high-net-worth individuals to strategic and corporate acquirers, sign a confidentiality agreement and submit a financial profile before receiving the CIM.
Step 6: Buyer & Seller Meeting
If a prospective buyer wants to pursue the opportunity after reviewing the CIM, we arrange a meeting with you. It can take place after hours or on a weekend, or during business hours if you are comfortable letting the buyer see the business in operation.
Closing
Step 7: The Offer
If the buyer sees a good fit, they submit an offer as a Letter of Intent (LOI), an Indication of Interest (IOI), or a contingent Purchase Agreement. The form depends on the type of business, the situation, and the buyer.
Step 8: Acceptance
You can accept the offer, counter it, or decline it. Once you and the buyer agree on price and terms, the buyer begins due diligence with their accountant or financial advisors, typically lasting two weeks to 45 days.
Step 9: Due Diligence
If the buyer is satisfied with their due diligence, you enter into a definitive purchase agreement (when an LOI or IOI was used) or release the conditions on the contingent purchase agreement.
Step 10: The Closing
The deal closes and the funds are transferred to you.
How long these steps take depends on a variety of factors. Learn more about our sell-side advisory services, or reach out for a free consultation.
Frequently asked questions about selling a business
- How much is my business worth?
- Value depends mainly on your company's earnings and buyer's perception of risk. We prepare an opinion of value using a market-based approach. The foundation of the value of all businesses are the earnings.
- How long does it take to sell a business?
- Every sale is different. Timing depends on the size and type of business, how well prepared its financial records are, and how quickly a qualified buyer is found. Once you and a buyer agree on price and terms, the buyer's due diligence typically takes two weeks to 45 days before closing.
- What is the difference between a business broker and an M&A advisor?
- Business brokers typically handle smaller sales that are often listed publicly. M&A advisors usually work with larger privately held companies and run a confidential, structured process aimed at private equity firms, strategic acquirers, and other qualified buyers. We have successfully completed transactions to publicly traded companies in the US and internationally, family offices and strategic buyers.
- How do you keep the sale of my business confidential?
- We market the business with a generic description that contains no identifying information. Buyers must sign a confidentiality agreement and submit a financial profile before they receive the Confidential Information Memorandum, and buyer meetings can be held after hours or on weekends.
- Who buys businesses like mine?
- Buyers include private equity firms, high-net-worth individuals, and strategic or corporate acquirers looking to grow. We identify and screen the buyers most likely to value your business and pay the best price.
- What should I prepare before selling my business?
- Start with three years of financial statements and any other information you find relevant. We can help clients configure their operations so the transition is smooth.
- Will my employees keep their jobs after the sale?
- Employees are among a business's most valuable assets, so new owners usually keep them. Keeping the sale confidential until it closes spares your team uncertainty and lets the new owner address their concerns directly.
Schedule a Free Consultation
Talk with a Seapoint professional about your goals and what your business could be worth.