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Frequently Asked Questions About Selling Your Business
What is my business worth?
The value of a business usually depends on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or SDE (Seller's Discretionary Earnings), revenue trends, industry demand, customer concentration, recurring revenue, management depth, owner dependency, growth opportunities, and buyer appetite. Many lower-middle-market businesses are discussed using broad EBITDA or SDE multiple ranges, but the right value depends on the specific company and market conditions. Archstone Business Brokers provides a confidential valuation discussion for owners of profitable $1M-$50M revenue companies so you can understand a realistic market range before going to market.
How long does it take to sell a business?
Most lower-middle-market business sales take around 6-8 months from engagement to closing, although timing varies by industry, buyer demand, financing, due diligence, and deal complexity. A typical process includes preparation and valuation, confidential buyer outreach, management meetings, Letter of Intent negotiation, due diligence, purchase agreement negotiation, and closing. Businesses with clean financial records, strong management, and low concentration risk usually move more efficiently.
How much does a business broker charge?
Archstone Business Brokers sell-side fee generally ranges from 2% to 10%, depending on transaction size, complexity, industry, buyer outreach, and scope of work. Unlike many other Business Brokers, there are no upfront broker fees, monthly retainers, or separate marketing charges.
Why should I use a business broker or M&A advisor when selling my business?
A qualified business broker or M&A advisor helps owners manage valuation, confidentiality, buyer outreach, buyer screening, negotiations, due diligence, and closing. Selling without representation can create risks such as weak buyer qualification, poor confidentiality controls, unrealistic pricing, unsupported add-backs, or preventable issues during diligence. Archstone Business Brokers senior advisory team has completed 100+ transactions representing over $600 million in deal value, giving owners experienced guidance through the parts of a sale where deals most often succeed or fail.
Will my employees, customers, vendors, or competitors find out I am selling?
No, not unless and until you decide the timing is appropriate. Confidentiality is the foundation of a professional sale process. Archstone Business Brokers does not identify your business by name in initial outreach. We use blind summaries, screen buyers, and require a signed Non-Disclosure Agreement before releasing sensitive information such as financials, customer details, employee information, or the Confidential Information Memorandum. Employees, customers, vendors, and competitors are not contacted without a controlled confidentiality plan.
What is EBITDA and why does it matter?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a common measure of operating profitability used in business sales because it helps buyers evaluate the earning power of the business before financing decisions and certain accounting items. Many lower-middle-market companies are valued using a multiple of adjusted EBITDA, with the multiple affected by industry, growth, recurring revenue, customer concentration, management depth, and risk. Understanding true adjusted EBITDA is one of the starting points for a serious valuation conversation.
What is SDE and how is it different from EBITDA?
SDE stands for Seller's Discretionary Earnings. It is often used for smaller or owner-operated businesses because it estimates the total financial benefit available to one full-time owner-operator. EBITDA is more common for larger or more professionally managed companies where management compensation is treated separately. The right metric depends on business size, owner involvement, management depth, and buyer type. Some businesses are discussed using both SDE and EBITDA so buyers can understand cash flow from different perspectives.
How does Archstone Business Brokers sell a business?
Archstone Business Brokers follows a structured, confidential sell-side process from valuation through closing. The process typically includes a confidential consultation, valuation and market assessment, engagement and preparation of marketing materials, confidential buyer outreach, buyer screening, management discussions, Letter of Intent negotiation, due diligence coordination, purchase agreement support, and closing. Each engagement is designed to protect confidentiality, reach qualified buyers, compare offers, negotiate deal structure, and reduce the risk of late-stage deal failure.
Who are the potential buyers for my business?
Potential buyers for a profitable $1M-$50M revenue business may include strategic acquirers, private equity firms, independent sponsors, family offices, search funds, competitors, portfolio companies, and qualified individual buyers. Each buyer type has different motivations, financing structures, diligence expectations, and views on value. A strategic buyer may focus on synergies, while a financial buyer may focus on growth, management depth, and future exit potential. Archstone Business Brokers targets outreach toward the buyer groups most likely to understand your business and close on acceptable terms.
How does Archstone Business Brokers market my business confidentially?
Archstone Business Brokers markets businesses through controlled, targeted outreach rather than uncontrolled public exposure. Initial outreach usually uses a blind summary that describes the industry, size, geography, and opportunity without identifying the company. Buyers are screened for fit, financial capability, acquisition intent, and seriousness before receiving more detail. Sensitive materials are shared only after an NDA is signed. This approach helps protect the seller while still reaching strategic buyers, private equity firms, independent sponsors, family offices, and qualified acquirers.
What documents do I need to prepare to sell my business?
Most buyers will request three years of tax returns, profit and loss statements, balance sheets, year-to-date financials, payroll information, customer and supplier details, lease or real estate documents, equipment lists, employee information, major contracts, licenses, and legal documents. Buyers may also ask for accounts receivable and accounts payable aging, debt schedules, insurance information, and customer concentration details. Organized documentation accelerates due diligence and helps buyers trust the numbers. Archstone Business Brokers helps owners understand what to gather before buyer outreach begins.
What is a Confidential Information Memorandum, or CIM?
A Confidential Information Memorandum, or CIM, is a professional buyer-facing document that explains the business after a buyer has been screened and signed an NDA. A CIM typically covers the business model, financial performance, products or services, operations, employees, customers, competitive advantages, growth opportunities, and reason for sale. The purpose is to help qualified buyers understand the opportunity while giving the seller a controlled way to present the business. A strong CIM can improve buyer understanding and reduce confusion during the offer process.
What is an LOI and what happens after I receive one?
An LOI, or Letter of Intent, is a document from a buyer that outlines proposed purchase price, deal structure, financing assumptions, due diligence period, exclusivity, transition expectations, and other key terms. Most LOI provisions are non-binding, but confidentiality and exclusivity are often binding. After an LOI is signed, the buyer usually begins formal due diligence, where they verify financials, operations, contracts, employees, legal documents, and other business information before negotiating a final purchase agreement.
What happens during due diligence?
Due diligence is the buyer's detailed review of the business after an LOI is signed. The buyer typically reviews tax returns, financial statements, revenue quality, add-backs, contracts, customers, employees, leases, equipment, legal documents, licenses, operations, and potential liabilities. This stage often takes 30-60 days, but timing depends on deal complexity and buyer financing. Archstone helps coordinate requests, manage communication, maintain momentum, and reduce the risk that preventable issues delay or derail the transaction.
What is seller financing and should I offer it?
Seller financing means the seller receives part of the purchase price over time instead of receiving all cash at closing. It can help expand the buyer pool, bridge valuation gaps, support financing, and show the buyer that the seller has confidence in the business after closing. The tradeoff is repayment risk if the buyer struggles after the acquisition. Seller financing is common in many lower-middle-market transactions, but the amount and terms depend on buyer quality, deal structure, lender requirements, tax considerations, and the seller's risk tolerance.
What is an earnout in a business sale?
An earnout is a portion of the purchase price that is paid only if the business reaches agreed performance targets after closing, such as revenue, gross profit, or EBITDA goals. Earnouts can help bridge gaps between buyer and seller expectations, especially when recent growth needs to be proven or the seller stays involved after closing. They can also create disputes if the formula, measurement period, or buyer operating control is unclear. Sellers should negotiate earnout terms carefully with legal and accounting advisors before signing a purchase agreement.
What is a Quality of Earnings report and do I need one?
A Quality of Earnings report, often called a QofE, is a financial analysis that evaluates the quality, sustainability, and accuracy of a company's earnings. Buyers may commission a QofE during due diligence, especially for larger or more complex transactions. Some sellers choose to obtain a sell-side QofE before going to market to identify issues early, support adjusted EBITDA, and reduce the risk of late-stage price renegotiation. Whether a sell-side QofE makes sense depends on deal size, financial complexity, buyer expectations, and the potential cost-benefit for the seller.
What taxes will I pay when I sell my business?
Taxes from selling a business depend on entity type, deal structure, asset allocation, purchase price allocation, seller financing, state tax rules, depreciation recapture, and whether the transaction is structured as an asset sale or stock sale. Some portions of a sale may qualify for capital gains treatment, while others may be taxed differently. Sellers should involve a CPA or tax advisor before signing an LOI because tax structure can materially affect net proceeds.
Can I sell my business if it has an SBA loan or other debt?
Yes, outstanding debt does not automatically prevent a business from being sold. In many transactions, business debt is paid off from sale proceeds at closing before the seller receives net proceeds. The lender may provide a payoff letter, and the closing process coordinates debt payoff, lien releases, and other required documentation. SBA loans, equipment financing, credit lines, and other debt should be disclosed early because they affect net proceeds and closing mechanics. Archstone helps owners understand how debt may factor into the transaction process.
How can I maximize the value of my business before selling?
The best improvements before a sale are usually the ones that increase sustainable cash flow or reduce buyer-perceived risk. Owners can often improve marketability by cleaning up financials, documenting add-backs, reducing customer concentration, strengthening management, renewing key contracts, documenting processes, improving margins, and showing credible growth opportunities. Physical or cosmetic improvements matter less than earnings quality, transferability, and risk reduction. Many owners benefit from preparing 12-24 months before going to market.
When is the best time to sell a business?
The best time to sell is usually when the business has strong recent performance, clean financial records, stable or growing margins, low concentration risk, strong management, and favorable buyer demand. Personal timing also matters. Owners who wait until burnout, health issues, customer loss, partner disputes, or declining performance often have less leverage. Many sellers get better outcomes when they evaluate timing 12-24 months before they need to exit, because they still have time to improve value drivers before launching a process.
Should I sell my business now or wait?
Whether to sell now or wait depends on business performance, industry buyer demand, your personal goals, valuation expectations, and what could realistically improve in the next 12-24 months. If the business is growing, well-documented, and attracting strong buyer interest, going to market may make sense. If financials are messy, margins are declining, customer concentration is high, or management is weak, preparing before selling may improve the outcome. Archstone gives owners an honest view of timing before recommending a sale process.
What if my business does not sell?
If your business does not sell, Archstone Business Brokers does not collect a success fee. However, a failed sale process can still cost time, create distraction, and sometimes involve outside legal, accounting, or advisory expenses. The best way to reduce that risk is to enter the market with realistic pricing, clean financial records, strong documentation, and a clear understanding of buyer concerns. If the timing is not right, Archstone Business Brokers may recommend preparing the business further before launching a full sale process.
Can I stay involved in my business after selling it?
Yes, many sellers stay involved after closing through a transition period, consulting agreement, employment agreement, or minority rollover equity. The right structure depends on the buyer's needs, the seller's goals, industry complexity, employee and customer relationships, and deal structure. Some sellers want a short handoff, while others remain involved for months or years. Post-closing involvement should be negotiated clearly so both sides understand duties, compensation, decision-making authority, and timeline.
What types of businesses does Archstone Business Brokers sell?
Archstone Business Brokers works with owners of profitable, established businesses generating approximately $1M-$50M in annual revenue. Core industries include healthcare, manufacturing, distribution, technology, transportation, eCommerce, services, engineering, consumer products, government contracting, construction, and related lower-middle-market sectors. Archstone Business Brokers is generally not the right fit for pre-revenue startups, very small main-street businesses, or companies with no clear path to profitability. If a business falls outside our focus, we may recommend a better-fit advisor or broker.
What if I receive multiple offers for my business?
Multiple offers can create leverage, but the highest headline price is not always the best offer. Sellers should compare cash at closing, seller financing, earnouts, working capital requirements, financing certainty, due diligence burden, buyer experience, transition expectations, and closing risk. A lower-cash-risk offer may be better than a higher offer with uncertain financing or aggressive earnout terms. Archstone Business Brokers helps owners compare offers on both economic value and certainty of closing.
What is the difference between a business broker and an M&A advisor?
The terms business broker and M&A advisor overlap, but the difference usually comes down to deal size, complexity, and process. Business brokers often work with smaller businesses, while M&A advisors typically handle larger or more complex lower-middle-market companies using confidential buyer outreach, detailed marketing materials, structured bidding, LOI negotiation, due diligence coordination, and more complex deal terms. Archstone Business Brokers combines business brokerage and M&A advisory services for owners of profitable $1M-$50M revenue companies.
How do I get started with selling my business?
The first step is a confidential conversation with an Archstone Business Brokers. We discuss your business, industry, revenue, profitability, timeline, goals, valuation expectations, confidentiality concerns, and potential buyer universe. You do not need to be ready to sell immediately. Many owners begin the conversation 12-24 months before going to market so they can understand value and prepare properly. To begin, request a confidential valuation conversation through the website or contact Archstone directly.