Stage One: The Valuation Call
It starts with a conversation about value. A broker asks about your sales, profit, staff, customers and lease, and gives you a working range. Nothing is signed and nothing is listed.
If the range doesn't meet your needs, this is where you find out what to fix. Some owners spend a year or two getting ready. Others are ready now.
Stage Two: Getting the Records in Order
Before any buyer sees your company, the broker will want three to five years of tax returns, profit and loss statements and balance sheets, plus your lease, key contracts and corporate documents.
Expect questions about anything unusual: a big jump or drop in one year, an owner perk run through the company, or a customer who left. Have a short, honest answer ready for each.
Being slow to produce a document reads to a buyer like hiding something. Having it ready reads like a well run company. Your CPA and attorney should be part of the team from here on.
Stage Three: Quiet Marketing
Your broker writes a blind summary that describes the company without naming it: industry, area, sales and cash flow. Buyers who are interested sign a confidentiality agreement before they learn more.
Keep the sale private from staff and customers until closing is close. Closing dates slip, and news that gets out early can cost you people and bargaining power.
For larger companies, buyers may come from far away. Owners of companies worth $5 million or more often sell to buyers based more than 100 miles from Kansas City.
Stage Four: Offers and the Letter of Intent
A serious buyer puts terms in a letter of intent: price, how it is paid, what is included and how long you stay on to help. Price is only one line. Cash at closing, a seller note and an earnout are very different things.
Our page on seller financing explains the most common structure in this range.
Stage Five: Due Diligence
The buyer and their lender check everything. They compare returns to bank deposits, call on your lease, review contracts and look hard at customer concentration.
Keep running the company at full speed. A dip in sales during diligence is one of the most common reasons a price gets cut.
Stage Six: Closing and the Filings
Closing day brings signed documents and funds, then a short list of government filings. In Missouri that includes tax clearance for your buyer, final returns and closing your state, city and county accounts.
Start those early. The seller filings guides cover each one, from Form 943 to the Kansas City earnings tax.
Stage Seven: The Handoff
Plan for it the same way you planned the sale. Write down the routines only you know, like which supplier gives you better terms if you call before noon.
Most sales include a training period. You introduce the buyer to key customers and vendors, show them the systems and answer questions. The length and any non compete terms are set in the purchase agreement.
Want to know where you would start? Read what is my business worth, then send the form or call (816) 555-0167.