How to sell a small business: the steps, in order

The nine steps at a glance

A sale has two halves. Steps 1 to 4 are preparation, and most of it is in your hands. Steps 5 to 9 are the sale itself, when a buyer, their accountant and often their lender test what you prepared. Many sellers have little time to prepare: in the Market Pulse survey for the second quarter of 2026 from the broker groups IBBA and M&A Source, brokers and advisors said between 60% and 90% of their sellers had done less than a year of exit planning (working out when and how to leave), or none.

Step	What happens	Read more
1. Decide why and when	Set your date, target and role afterward	Exit planning
2. Get numbers a buyer can verify	Records, earnings restated for a buyer, expenses you can add back	Seller's discretionary earnings, add-backs
3. Fix what a buyer will mark down	Owner dependence, a few big customers, leases	Run without you, customer concentration
4. Learn what it is worth	A price range built on your restated earnings	What is it worth?
5. Choose how to sell	Broker, listing, own approach, employees or family	By owner or with a broker
6. Find and screen buyers	Anonymous summary, meetings, offers	SBA-financed buyers
7. Agree the deal	Letter of intent, price, terms	Letter of intent, asset vs stock
8. Get through due diligence	The buyer, and often their lender, check your records	Documents, quality of earnings
9. Close and hand over	Agreement signed, funds move, handover	How long it takes

In the same survey, sales of businesses valued up to $2 million, which its highlights call Main Street, averaged six to ten months from engagement to close, and sales from $2 million to $50 million, the lower middle market, averaged 11 to 12 months. These are averages for sales that brokers and advisors handled, and the clock starts when you engage a broker, so it excludes your preparation.

Step 1: Decide why you are selling, and when

Start with what you need: the amount you want after tax and fees, your finish date, and whether you will stay on afterward.

Retirement was the top reason sellers went to market in every deal-size band in the IBBA's Q2 2026 Market Pulse survey: 45% of sales under $500,000, and nearly two-thirds or more from $500,000 to $50 million. Exit planning for small business owners covers when to start.

Step 2: Get numbers a buyer can verify

A buyer pays for what the business earns, and their lender needs proof. Gather three years of profit-and-loss statements, balance sheets and business tax returns that agree with each other. Lenders making loans backed by the U.S. Small Business Administration (SBA) analyze the three most recent year-end financials and check what the seller reported against IRS tax transcripts, the IRS's own record of those returns (SBA lender rules).

Small-business accounts are prepared for tax reporting, not to show a buyer the cash flow available to an owner. Recasting presents the same records in the way buyers and lenders assess them. The result is your seller's discretionary earnings (SDE): what one owner takes out of the business in a year, including pay and perks. Each add-back (a personal or one-off expense you ask a buyer to count as profit) needs a document behind it; see add-backs. Above about $2 million, the IBBA's Q2 2026 highlights report prices as multiples of EBITDA (earnings before interest, taxes, depreciation and amortization), which assumes a paid manager. SDE vs EBITDA explains which one a buyer will use.

Step 3: Fix what a buyer will mark down

Buyers often mark a business down for a few common reasons: it depends on you, a few customers make up most of the revenue, the lease or a license will not transfer, or the records do not add up. Owner dependence often takes longest to fix, so start with how to make your business run without you. Then check customer concentration and read your lease, licenses and key contracts for clauses triggered by a sale before a buyer's lawyer does. The preparation checklist covers all of it.

In the IBBA's Q4 2022 Market Pulse report, brokers listed poor financials among the reasons deals did not close (9% to 20% of responses, depending on size) and lack of seller preparation (7% to 9%).

Step 4: What is your business worth?

Small businesses are usually priced as earnings times a multiple that reflects a buyer's view of risk; what is my small business worth? shows how. For a number you can plan around, ask a broker who sells in your industry for an opinion of value, or use a certified appraiser for a formal valuation.

Unrealistic seller value expectations were the top reason deals did not close in every deal-size band in the Q4 2022 report, at 22% to 26% of responses. Why businesses don't sell has the rest.

Step 5: Choose how to sell, with or without a broker

Four main routes, which you can combine:

• A broker or sale advisor. Markets the business without naming it, screens buyers and runs the negotiation, for a fee.
• An online listing. Reaches many buyers; you still screen who responds.
• Your own approach. Customers, suppliers, competitors, people you know. It costs less money and more of your time.
• Employees or family. The buyer knows the business, but price and financing still need discipline.

Selling a business by owner or with a broker compares fees, pros and cons. Whichever you pick, bring in your CPA and a lawyer. The SBA's guide to selling says an attorney should review the written sales agreement.

Step 6: How do you find a buyer?

In the IBBA's Market Pulse survey for the fourth quarter of 2025, individuals made up about 78% of Main Street buyers (businesses valued up to $2 million): first-time buyers 46% and serial entrepreneurs, who have owned businesses before, 32%. In the lower middle market, individuals made 44% and private equity about one fifth.

Buyer	What to know
An individual	Often borrows part of the price, so a lender will test your numbers.
A competitor	Wants your customers, people or locations. Approach through a broker or lawyer, and share details only after they sign a confidentiality agreement (NDA).
An investment firm	Tends to buy larger businesses, or adds smaller ones to a business it already owns.
Employees or family	Know the business, usually need financing. SBA rules treat employees of 24 months or more differently.

Keep the sale confidential, because staff, customers and suppliers can leave over a rumor. Share an anonymous summary first, have each serious buyer sign an NDA before they see your name or numbers, and ask for proof of funds before you open your records.

A buyer who borrows may use the SBA's 7(a) loan program, which can fund a change of ownership up to $5 million. Under the lender rules effective October 1, 2026, the lender must get a business valuation prepared for the lender, not for you or the buyer, for any business price above $350,000 (not counting real estate). At or below that, the lender may do its own, unless buyer and seller are closely related.

Rules change, and the buyer's lender applies SBA's rules to each deal, so ask which version it is using. Selling to a buyer with an SBA loan explains what changes for you.

Step 7: How do you agree the deal?

Buyers put an offer in writing, usually as a letter of intent: a short document that sets the price, how it is paid and the conditions for going ahead. Some clauses, such as exclusivity (you agree not to talk to other buyers for a set period), can bind you, so have your lawyer read it first. Terms decide how much you receive, and when.

• Cash and seller note. In the Q2 2026 survey, sellers got 83% to 92% cash at close on average, and seller financing was under 10% of most deals. A seller note means you lend the buyer part of the price. When a new owner buys with an SBA loan, the buyer must put in at least 10% of the total project cost, meaning everything needed to buy the business and get it running. A seller note can count toward at most half of that 10%, and only if you take no payments, not even interest, while the SBA loan runs (SBA lender rules).
• Earn-outs. An earn-out ties part of the price to results after the sale. The SBA's rules do not allow seller earn-outs in loans that fund a change of ownership (SBA lender rules).
• Asset sale or stock sale. The buyer buys either the business's assets or the owner's shares or LLC interests, which changes what they take on and how the sale is taxed: asset sale vs stock sale.
• Tax. In an asset sale, the IRS treats a lump-sum sale of a business as a sale of each asset in it, so the price is split among the assets and the split determines the gain or loss on each one. How each part of the gain is taxed depends on the type of asset and how long it was held, and some of it can be taxed as ordinary income rather than capital gain (IRS Publication 544). Buyer and seller usually report the split on Form 8594.

Step 8: Get through due diligence

Due diligence is the period after you accept an offer when the buyer, their accountant and often their lender check everything you told them. Expect requests for three years of financials and returns, sales by customer, the lease, contracts and licenses; the documents buyers and lenders ask for is the full list.

When a new owner buys with an SBA loan and the business price is $3 million or more (not counting real estate the business owns and uses), the lender must also get a quality of earnings report, an independent review of your earnings done for the lender. It must reconcile your statements, tax returns and IRS data, and document every add-back, so your step 2 add-backs are tested line by line (SBA lender rules). Answer requests promptly, and ask your lawyer how to raise any known problem early.

Step 9: Close and hand over

The purchase agreement sets out the price, the terms and your role afterward. Closing is the day the documents are signed and the funds move. In a typical SBA-financed sale you cannot stay on as an officer, director, stockholder or employee, but the business can hire you as a consultant for up to 24 months (SBA lender rules).

What to do first

• Write down what you need after tax and fees, your finish date, and whether you will stay on.
• Lay your last three years of business tax returns and profit-and-loss statements side by side. If the profit does not match, find out why.
• List every personal, family and one-off expense in the books, with the document that proves each one.

The first item is step 1. The other two start step 2: they show what the business really earns and what a buyer will question.

If you run an HVAC, plumbing or electrical business, see how to sell one.

Keep reading

• Checklist for selling a business: how to prepare it for sale
• Selling a business by owner or with a broker: fees, pros and cons
• How long does it take to sell a small business?
• What is my business worth? How to value a business for sale

This guide is general information, not tax, legal or valuation advice. Every business is different: talk to your accountant, lawyer and broker about yours.