How to sell my business

Price is only one part of the outcome. Before you talk to anyone, write down what matters most to you. Owners usually land somewhere between four goals, and they pull in different directions.

• Proceeds. The cash you keep after taxes, fees and any debt payoff, which is a different number from the headline price.
• Certainty. How confident you are that the deal closes at all, and closes at the number first offered.
• Your people. Whether the team, the name and the location stay intact after you leave.
• Your time. How long you stay involved after closing, and in what role.

A sale that is right for one owner is wrong for another. Knowing your own ranking early keeps you from being talked into a structure that does not fit.

The buyer type shapes everything else: the price, the structure, and what happens to your company afterward.

Cypress Holding Co. is the fourth kind. We buy established Pacific Northwest businesses and hold them, so there is no second sale a few years later. More about how we operate.

Every deal is different, but almost all of them move through the same seven stages.

For a healthy small business with organized records, six to twelve months from first conversation to closed deal is a normal range. Deals that involve bank financing, real estate, multiple entities or messy books run longer. A direct sale to a buyer who is already familiar with your industry can close in sixty to ninety days.

The single biggest source of delay is not the buyer. It is unfinished preparation on the seller's side, which is why getting ready before you go to market is worth the effort.

Expect to produce most of the following. Having them ready shortens diligence and signals that the business is well run.

• Three years of financial statements and business tax returns
• A current year-to-date profit and loss statement and balance sheet
• A list of add-backs: owner salary, personal expenses, one-time costs
• Revenue by customer, so the buyer can see concentration
• Payroll summary, org chart, and who holds critical knowledge
• Major contracts: customers, suppliers, leases, licenses, loans
• An equipment and inventory list with condition and age
• Any pending litigation, tax issues, or regulatory matters

Not every offer is an offer. Before you grant exclusivity, ask three direct questions.

• Where is the money coming from? Cash on hand, a committed loan, or capital they still have to raise. Ask for proof of funds or a lender's commitment letter.
• What is the actual structure? How much at closing, how much in a seller note, how much tied to future performance in an earnout. A large headline number paid mostly through an earnout is a smaller number.
• Have they closed before? Ask what they have bought, and ask to speak with a seller they bought from.

• Waiting until you are exhausted or ill, which removes your leverage and your patience
• Selling on a down year rather than after a clean, documented one
• Running personal expenses through the business without tracking them, so earnings look lower than they are
• Letting one customer grow to a large share of revenue
• Being the only person who knows how the business truly works
• Skipping tax advice until after the letter of intent, when structure is already set
• Telling staff or customers too early, before the deal is real

A tax advisor and a transaction attorney should be involved before you sign a letter of intent. The structure of a deal, asset sale versus stock sale, often changes your after-tax proceeds more than the price does.

If you are early, start with what your business is likely worth. If you already have a number in mind, work through the preparation checklist. And if you would rather talk it through with a buyer directly, we are happy to have a first conversation with no obligation on either side.