How to Sell a Business: A Founder's Guide to Closing Both Deals

To sell a business, you work through seven steps: decide why and when, make the company run without you, establish what it's worth, build your deal team, choose the right buyer, negotiate the letter of intent, and get through due diligence to close. Active selling usually takes six to twelve months. The preparation that decides your price should start one to three years before that.

That's the answer most guides give you. It's true, and it's half the story.

Every exit is two deals. The first is with your buyer: price, terms, close. The second is with yourself: who you are when the company is no longer yours, what you're protecting, and what you walk toward after the wire hits. Most founders negotiate the first deal for two years and the second for about two weeks. That's why so many of them close well and still regret it.

I know both deals from the inside. I sold a regulated healthcare company with more than 100 employees in a confidential, 24-month process. While I did it, my marriage was dissolving, my husband was in addiction treatment, and I was pregnant with our fourth daughter. No one on the deal knew. I closed on time, on budget, and legacy aligned.

This guide walks you through both deals, step by step.

Before you start: every exit is two deals

The buyer deal is the one everyone prepares you for. Your M&A advisor, your attorney and your CPA are all built for it. It covers valuation, deal structure, due diligence and the closing date.

The personal deal is the one nobody staffs. It asks harder questions. Who am I when I'm no longer the founder? What am I protecting: my people, my name, my family, my health? What does "done" feel like, and what do I walk toward the morning after?

The two deals are not separate. The second one shows up inside the first, every time.

• A founder who hasn't settled what they're protecting negotiates from fear. They over-concede on price or cling to terms that don't matter.
• A founder who hasn't decided what comes next stalls in diligence. Some part of them doesn't want the deal to close.
• A founder carrying a private burden gets tired, then short, then careless. Buyers notice. Deals re-trade.

The data says the cost is real. The Exit Planning Institute reports that 76% of owners who sold profoundly regretted it within a year. Their research also finds that only 20% to 30% of businesses that go to market actually sell.

Definition: Two Deals means closing the deal with your buyer and the deal with yourself in parallel, so the price you get and the life you get both hold. It's the method at the center of my work with founders.

Step 1 — Decide why, when, and what "done" looks like

Decide your reason, your timing and your finish line before you talk to a single advisor. Everything downstream, from price to buyer to structure, bends around these three answers.

Why. Some exits are chosen. Others are forced by what exit planners call the 5 Ds: death, disability, divorce, disagreement between partners, and distress. A forced exit sells on the buyer's timeline. A chosen one sells on yours. The best protection against a forced sale is a business that's ready to sell before you need it to be.

When. There are two clocks. The market clock asks whether buyers are paying for companies like yours right now. The personal clock asks whether you have the energy, the health and the bandwidth for a process that will test all three. When the clocks disagree, the personal one usually wins, and it should be planned for, not discovered.

What "done" looks like. Write down three things before you start:

1. Your walk-away number. The after-tax amount that funds the life you want. Not the headline price.
2. Your non-negotiables. The people you protect, the name you keep, the promises you made.
3. Your role after close. Stay two years, consult for six months, or leave at signing. Each one changes who will buy and what they'll pay.

If you can't answer these yet, you're not late. You're early, and that's exactly when this work pays the most.

Step 2 — Make the business sellable without you

Buyers pay for what stays after you leave, and they discount everything that walks out the door with you. The single biggest lever on your multiple is how much the company depends on you.

Start with an honest audit. If you disappeared for 90 days, who would make the decisions? Who holds the key client relationships? Where do the processes live, in documents or in your head?

Two items deserve early attention.

• Clean books. Buyers will rebuild your earnings line by line. For larger deals, a sell-side Quality of Earnings report, commissioned by you before going to market, finds the problems before the buyer's accountants do.
• Key-person risk. Name your successors, put retention agreements in place for the people who matter most, and step back from the daily work long enough to prove the company runs without you.

Step 3 — Know what your business is worth

Most privately held businesses are valued as a multiple of their earnings, and the multiple rises with size, quality and how little the company depends on you. Revenue matters less than most founders expect.

Which earnings number?

• SDE (seller's discretionary earnings) is used for smaller, owner-operated businesses. It adds the owner's salary and personal perks back to profit, because a new owner-operator would take them.
• EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for one-off items, is used once a company has a management team. That's typical above roughly $1 million of earnings, and it's how private equity and strategic buyers price.

What multiples look like right now. For small businesses sold through brokers, BizBuySell's Q2 2026 data shows an average cash-flow multiple of about 2.65x, with a median sale price of about $349,000. In the lower middle market, GF Data reports private-equity deals averaging 6.4x EBITDA for companies valued at $10–25 million, 6.8x at $25–50 million and 8.3x at $50–100 million (first nine months of 2025). The jump between those worlds is why Step 2 matters so much: a company that runs without its founder moves up the ladder.

An illustrative example (not a valuation):

The ranges are for illustration only. Your industry, growth, margins, customer mix and deal terms will move them, sometimes a lot.

The questions founders ask most:

• How much is a business worth with $500,000 in sales? It depends on earnings, not sales. If $500,000 of revenue produces $100,000 of SDE, a small-business multiple of 2x–3x suggests roughly $200,000–$300,000.
• Is a business worth 3 times profit? For many small, owner-run businesses, 2x–3x SDE is in the normal range. Larger, well-run companies often sell for 5x–8x EBITDA or more.
• How much should my business sell for? Get a professional valuation before you go to market. It anchors your expectations, strengthens your negotiating position and shows you which fixes add the most value.

Step 4 — Assemble your deal team

Hire an intermediary sized to your deal, then surround them with an attorney, a tax adviser and a wealth adviser who all start before the letter of intent.

Fee levels vary widely, so ask every candidate for their full fee schedule in writing.

The rest of the team:

• M&A attorney. Not your general counsel. Someone who negotiates purchase agreements every month.
• CPA or tax adviser. Brought in early, because the biggest tax savings disappear once the deal terms are set (see the tax section below).
• Wealth adviser. To turn a single concentrated asset into a plan that funds the rest of your life.

Then there's the gap none of them are hired to fill: you. Every advisor on the list works on the transaction. No one is assigned to the founder carrying it. That's the work I do, alongside the deal team, not instead of it.

Can you sell without a broker? Sometimes. It can work when a known buyer, such as a competitor, a partner or your management team, has already approached you. The risk is selling to one bidder with no competition to set the price. If you go it alone, still hire the attorney and the tax adviser.

Step 5 — Choose the right buyer

Different buyers pay for different things, so decide what you're optimizing for (price, speed, your people or your legacy) before you pick who to sell to.

Strategic versus financial buyer. Strategic buyers can often pay more because they value synergies such as shared customers and cost savings. Financial buyers pay for the company's own earnings and growth, but they may offer a "second bite": you keep a slice of equity, called rollover equity, that can be worth a lot when they sell again.

Selling to a competitor can mean the best price, but it's also the biggest confidentiality risk. Share sensitive customer, pricing and employee data only in stages, under a strict NDA, and only once a serious offer is on the table.

Seller financing is expected more often than owners plan for. A BizBuySell survey found 90% of buyers expect it, but only 29% of owners plan to offer it. Decide your stance before the first offer arrives.

Step 6 — Go to market and negotiate the letter of intent

The letter of intent (LOI) is the most important document you'll sign, because it's the last moment you hold the leverage. Once you grant exclusivity, competing buyers go away and every open point gets harder to win.

How a sale goes to market:

1. Blind teaser. A one- or two-page overview that describes the business without naming it.
2. NDA. Interested buyers sign before they learn who you are.
3. Confidential Information Memorandum (CIM). The full story of the business: operations, financials, customers, growth plan.
4. Management meetings. Buyers meet you and your leadership team. They're buying the team as much as the numbers.
5. Indications of interest. Non-binding price ranges that let you narrow the field.
6. Letter of intent. The winning buyer's proposed terms, usually with an exclusivity period.

What an LOI actually decides:

• Price and how it's paid: cash at close, seller note, earnout, rollover equity.
• Working-capital target: a technical line that can quietly move your proceeds by a meaningful amount.
• Exclusivity: how long you're off the market.
• Your role after close: employment, consulting, non-compete.

Earnouts deserve extra care. An earnout pays part of the price later, only if the business hits agreed targets after you've sold. Once the buyer runs the company, you no longer control the things that decide whether you hit those targets. Define the metrics, the accounting rules and your authority in writing, in detail. In one of my exit case files, the founder collected 100% of the earnout. That outcome was negotiated long before the targets were measured.

When there's only one bidder. A single-bidder process shifts power to the buyer, and founders often feel they must accept its timeline. You don't. In another case file, a sole-bidder negotiation was reframed and the founder set their own deadline.

Step 7 — Get through due diligence and close

Due diligence is where deals die, and they usually die of fatigue, not facts. The buyer's team will test every claim you've made, and they'll do it while you're still running the company.

What they'll ask for: financial statements and tax returns, customer and supplier contracts, employee agreements, intellectual property, litigation, regulatory filings and licences. Most sellers set up a virtual data room. Most buyers commission their own Quality of Earnings review.

How founders lose deals in diligence:

• Slow or incomplete answers that make the buyer wonder what else is hidden.
• Surprises that should have been disclosed at the start.
• Performance slipping because the founder's attention is on the deal, not the business.
• The founder's own exhaustion turning into short answers, reopened points and emotional decisions.

When life happens mid-deal

The deal can't pause for grief. It can't pause for a diagnosis, a divorce or a family crisis either. It keeps its timeline, and it expects you to keep yours.

I know because I lived it. During the 24 months I spent selling my healthcare company, my marriage was coming apart. My husband was in addiction treatment. I was pregnant with our fourth daughter. The stress was so acute I thought I was losing my hearing, and I was afraid I'd go into labor early.

No one on the deal knew.

I closed on time, on budget and legacy aligned. But I learned that carrying the weight in silence is the most expensive way to sell a company. What got me through was not more willpower. It was knowing exactly what I was protecting, and refusing to let the chaos make decisions for me.

If you're carrying something no one on your deal knows about, you are not the exception. You're closer to the rule than anyone will tell you.

Closing. The final steps are the purchase agreement, including representations, warranties and indemnities; any escrow or holdback of part of the price; and a transition services agreement that defines what you'll do after the wire arrives.

Plan the taxes before you sign the LOI

Taxes are often the largest single cost of selling a business, and most of the ways to reduce them have to be in place before the deal terms are set. Bring your tax adviser in at the start, not at closing.

A business sale is many sales at once. In the IRS's words, "When you sell a business, you are usually not selling one asset but many." The price has to be allocated across asset classes such as equipment, inventory and goodwill, and each class can be taxed differently. That allocation is negotiated, so it belongs in your deal strategy.

Questions to settle with your tax adviser early:

• Asset sale or stock sale? Buyers often prefer to buy assets. Sellers often prefer to sell stock. The structure changes what you keep.
• Capital gains or ordinary income? Gains on assets held more than a year are generally long-term capital gains, usually taxed at lower rates. Some parts of a sale, such as depreciation recapture or consulting payments, may be taxed as ordinary income.
• Installment sale? Receiving payments over time can spread the tax over several years.
• State taxes. Where you live, and where the business operates, can change the total significantly.
• Qualified small business stock (Section 1202). Some C-corporation shareholders may exclude part or all of their gain. Eligibility rules are strict, so confirm it; don't assume it.
• Estate and gifting moves. Transfers to family or trusts generally work best before a buyer and a price exist.

This section is general education, not tax advice. Your tax adviser should model your specific numbers.

How long does it take to sell a business?

The active sale usually takes six to twelve months, but the preparation that sets your price starts one to three years earlier.

The letter of intent is the turning point: before it you choose among buyers, after it one buyer tests you. Durations are typical ranges and vary by size, industry and buyer.

Can you sell faster? Yes, but speed usually costs you. A quick sale means fewer buyers, less competition and less time to fix what lowers your price. If speed matters, the fastest route is being ready before you start.

If you run a regulated or trust-heavy company

Selling a regulated company takes longer and carries more risk, because the licences, contracts and relationships you depend on may not transfer automatically. Healthcare, financial services, legal, accounting and other professional-services firms all share this.

Plan for these early:

• Licences and approvals. Some licences, certifications and permits don't move with a sale. Others need regulator notice or approval, which adds weeks or months.
• Payer and client contracts. In healthcare, insurance and government payer contracts may need change-of-ownership filings. In professional services, clients may need to consent before their files and relationships transfer.
• Key professionals. When clinicians, advisers or partners hold the relationships, the buyer is really buying their willingness to stay. Retention agreements belong in the deal.
• Confidentiality. In a trust-based business, a leak costs more than momentum. Staff, patients or clients who hear about a sale secondhand can walk.

The company I sold was a regulated healthcare business with more than 100 employees. In a sale like that, much of the risk sits in approvals and relationships that never appear on a financial statement. Talk to a regulatory attorney in your industry before you go to market.

The second deal: life after the sale

The sale ends your role as owner, not your need for purpose, and the founders who don't regret their exit decided what comes next before they signed.

For years the company gave you a calendar, a title, a team and a reason to get up early. The wire gives you money. It doesn't give you any of the rest. That's why so many owners feel lost after a sale that looks like a success from the outside.

The second deal asks you to settle a few things with yourself:

• Identity. Who you are when no one calls you the founder.
• Money. How a single concentrated asset becomes a plan for spending, investing and giving. Sudden wealth brings its own pressure, on you and on the people around you.
• People. What you owe the team that built it with you, and how you'll honor that in the deal.
• Legacy. What you want the company, your family and your community to say about how you left. In one of my case files, a legacy partner agreement was signed and the founder kept the cottage.
• What's next. Something specific to move toward, not just something to leave behind.

The person you become in order to close is the one who walks into the rest of your life. Close both deals, and you keep the price and yourself.

Not sure where you stand on either deal? The Founder Exit Audit gives you a scored read on both: the deal with your buyer and the one you promised yourself.

Selling a business checklist

Use this list to see where you stand; each item maps to a step above.

Decide (Step 1)

• My reason for selling is written down
• I know my after-tax walk-away number
• I've named my non-negotiables: people, name, promises
• I've decided what role I want after close

Prepare (Step 2)

• The business could run for 90 days without me
• Key customer relationships are held by the team, not only by me
• Three years of clean financial statements are ready
• No single customer is a dangerous share of revenue
• Key people have retention agreements

Value and team (Steps 3 and 4)

• I have a professional valuation
• I've chosen a broker, M&A advisor or bank sized to my deal
• My M&A attorney, tax adviser and wealth adviser are engaged

Buyers and terms (Steps 5 and 6)

• I know which buyer types fit my goals
• I've decided my stance on seller financing, earnouts and rollover equity
• My tax strategy is set before any letter of intent

Close and after (Step 7 and beyond)

• A data room is organized and complete
• Regulatory approvals and transfers are mapped
• I've decided what I'm walking toward after the sale

Frequently asked questions

How much is a business worth with $500,000 in sales? It depends on profit, not sales. Buyers value most small businesses as a multiple of seller's discretionary earnings. If $500,000 of revenue produces $100,000 of SDE, a multiple of 2x to 3x suggests roughly $200,000 to $300,000. Higher margins, recurring revenue and less owner dependence push the value up.

Is a business worth 3 times profit? For many small, owner-run businesses, 2x to 3x earnings is in the normal range; BizBuySell's recent average is about 2.65x. Larger companies with a management team are usually valued on EBITDA, often at 6x or more in the lower middle market.

How long does it take to sell a business? The active sale usually takes six to twelve months, from choosing advisors to closing. Preparing the business so it sells well should start one to three years earlier.

Can I sell my business without a broker? Yes, especially if a known buyer has already approached you. The risk is selling without competition, which usually lowers the price. Even without a broker, hire an M&A attorney and a tax adviser.

What is an earnout? An earnout is part of the sale price paid later, only if the business hits agreed targets after closing. Because the buyer controls the company by then, define the targets, accounting rules and your authority in detail in the purchase agreement.

Should I tell my employees I'm selling? Usually not until the deal is close to certain, except for a small group of key leaders who must help with diligence. Plan the announcement, and consider retention agreements for the people the buyer is counting on.

Do I pay capital gains tax when I sell my business? Often, on at least part of the sale. Gains on assets held more than a year are generally long-term capital gains, but some parts of a sale can be taxed as ordinary income. How the deal is structured changes the result, so involve a tax adviser before the letter of intent.

Sources

• Exit Planning Institute — State of Owner Readiness: only 20% to 30% of businesses that go to market actually sell.
• Exit Planning Institute — Emotional considerations before exiting: 76% of owners who sold profoundly regretted it within a year.
• Sundance Financial — BizBuySell Q2 2026 Insight Report takeaways: median sale price about $349,000, average cash-flow multiple 2.65x, 90% of buyers expect seller financing versus 29% of owners planning to offer it.
• BizBuySell Insight Report (the original report).
• CapitalPad — Lower middle market EBITDA multiples, citing GF Data, first nine months of 2025: 6.4x at $10–25M, 6.8x at $25–50M, 8.3x at $50–100M enterprise value.
• IRS Publication 544, Sales and Other Dispositions of Assets: allocating the price of a business sale.
• IRS Topic 409, Capital gains and losses: the one-year holding period.
• Exit Brilliantly exit case files and the Two Deals method.

Illustrative examples are not valuations, and nothing in this guide is tax, legal or investment advice.