What Are the Steps to Selling a Business?

← Back to all articles

Most business owners have never sold a business before. They've built one — sometimes over decades — but the exit process is entirely foreign territory. That unfamiliarity is one of the main reasons owners either leave money on the table, let deals fall apart, or simply never get around to selling at all.

Here is a straightforward, step-by-step walkthrough of what the process actually looks like from start to finish. The timeline varies — a well-prepared business can close in four to six months; a complex deal or unprepared seller can take longer — but the steps are consistent.

Step 1: Make the Decision to Sell

This sounds obvious, but it matters more than people realize. Sellers who are ambivalent — who aren't sure they want to sell, or who are testing the market without real commitment — almost never close deals. Buyers and experienced brokers can sense hesitation, and it creates friction at every stage. Before you do anything else, get clear on your why. Retirement, health, a new opportunity, burnout, a desire to cash out while the business is strong — all legitimate. But the decision needs to be real, because everything downstream depends on it.

Step 2: Get a Business Valuation

Before you can go to market, you need to know what your business is actually worth. A professional valuation — not a back-of-napkin guess based on what your neighbor got for his shop — looks at your adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), applies an appropriate industry multiple, and accounts for business-specific risk factors. Knowing your realistic value range prevents overpricing (which kills deals) and underpricing (which leaves money on the table). It also gives you a benchmark against which to evaluate any offers you receive.

Step 3: Engage a Business Broker

A qualified broker does far more than list your business on a website. They manage the entire process confidentially, help you prepare, reach qualified buyers, structure the deal, and keep negotiations from blowing up. More on what brokers actually do in a dedicated article — but the short version is: the right broker pays for themselves many times over in final sale price, deal structure, and time saved. For businesses up to $50M in Los Angeles, working with a broker affiliated with a strong national network like First Choice Business Brokers gives you access to a deep pool of pre-qualified buyers.

Step 4: Prepare Your Financials and Business Package

Before marketing begins, your broker will help you assemble everything a serious buyer will need to evaluate the opportunity. This includes three years of tax returns, profit and loss statements, a current balance sheet, an equipment list, lease documents, and an owner's discretionary earnings (ODE) analysis that recasts the financials to show true cash flow. Clean, organized financials speed up due diligence and reduce the risk of a buyer re-trading the price after seeing the books. If your records are a mess, this is the stage where that gets addressed.

Step 5: Create the Marketing Package

Your broker will prepare a Confidential Business Review (CBR) — sometimes called a Confidential Information Memorandum — that presents the business professionally to prospective buyers. This document covers the business overview, financials, operations, competitive position, growth opportunities, and asking price. It tells the story of your business in the most compelling, accurate way possible. Alongside the CBR, your broker will create a blind listing — a teaser with no identifying information — for use on listing platforms and in buyer outreach.

Step 6: Market to Buyers and Qualify Inquiries

Once the package is ready, your broker goes to market through multiple channels: proprietary buyer databases, business-for-sale platforms like BizBuySell and the FCBB network, direct outreach to strategic buyers, and relationships with M&A advisors and private equity. Serious buyers are required to sign a Non-Disclosure Agreement (NDA) before receiving any identifying information. Your broker also qualifies buyers financially before your time is spent on meetings — filtering out tire-kickers and unqualified prospects.

Step 7: Buyer Meetings and Letters of Intent

Qualified, NDA-signed buyers receive the full CBR and, if interested, schedule a meeting with the owner. These meetings — often called "management presentations" in larger deals — are your opportunity to sell the vision, answer questions, and build confidence in the transition. Interested buyers then submit a Letter of Intent (LOI), which outlines the proposed purchase price, deal structure (asset vs. stock sale, seller financing terms, earnout provisions), and key conditions. The LOI is non-binding, but it sets the framework for everything that follows.

Step 8: Due Diligence

Once an LOI is signed, the buyer enters a formal due diligence period — typically 30 to 60 days. They (and their accountants, attorneys, and sometimes industry advisors) will examine every aspect of the business: financials, contracts, leases, employee agreements, customer relationships, legal history, and operational systems. This is where deals most commonly go sideways. Surprises discovered in due diligence give buyers leverage to renegotiate or walk away. A well-prepared seller — with clean financials and organized documentation — moves through this stage smoothly.

Step 9: Negotiate the Final Deal

After due diligence, the buyer and seller finalize the purchase agreement with their respective attorneys. Price adjustments may be negotiated based on due diligence findings, but a well-prepared sale minimizes surprises. Key issues at this stage include seller financing terms, transition support commitments, non-compete agreements, employee retention, and any contingencies related to lease assignment or third-party approvals. Your broker remains active here — keeping both sides at the table, managing emotions, and helping resolve sticking points before they become deal-breakers.

Step 10: Close Escrow

Once the purchase agreement is signed, the transaction moves to escrow. An escrow company holds the buyer's funds, manages the transfer of all business assets, coordinates with the landlord on lease assignment, handles the UCC lien searches and any bulk sale notice requirements under California law, and ultimately disburses funds to the seller at closing. Closing day is the finish line — funds are released, documents are signed, and ownership transfers. Most transactions include a transition period where the seller stays on for a defined period to train the new owner and introduce key relationships.

How Long Does It Take?

In the Los Angeles market, a well-prepared business with clean financials and a realistic asking price typically goes from listing to close in four to eight months. Businesses that are overpriced, poorly documented, or where the seller is ambivalent can sit on the market for a year or more — or never sell at all. Preparation is the biggest lever you have on timeline.

If you are considering a sale in the next one to three years, the best time to start the conversation is well before you need to. Understanding the process, getting a realistic valuation, and knowing what to prepare gives you maximum control over the outcome.