Step 2: Prepare to Sell
Once you've decided to sell and determined which outcomes you care about, preparation is key to marketing the business, finding buyers, and negotiating effectively. First, you'll want to get organized.
Documentation Required to Sell a Business
Compile historical company information and prepare organized overviews covering:
Financial Statements
Detailed income statements, balance sheets, and cash flow statements for each year. If business is seasonal or cyclical, provide monthly financials for 2+ years.
Organizational Details
All locations/facilities, products/services offered, legal entity structure, leadership hierarchy, and headcounts.
Customer Information
Breakdown of customer concentration, retention rates, how accounts are acquired/managed, and what constitutes a profitable target customer.
Growth Plans
Quantitative financial projections and qualitative descriptions of expansion opportunities through adjacencies, target segments, etc.
Depending on the specifics of your business, it might be helpful to prepare other documents like:
Organizational chart of employees
Exclusivity agreements with suppliers or distributors
Compensation and tenure of employees
Details on large customers (i.e., contracts)
Current backlog of work
Asset list
How to Present Your Business Health to Buyers
Seasoned buyers and investors focus on business fundamentals (gross/net margins, pricing power, market position, comparison to competitors), not unchecked growth projections. These are the same metrics that will come up during deal negotiations and due diligence.
Highlight stability first and growth second. Address known operational risks rather than appearing evasive. For example, if you lost a major customer, explain what happened and how you diversified since then. Buyers will find out anyway; transparency builds trust.
Key Financial Metrics Buyers Evaluate
As you prepare to engage with potential buyers and sell, pay special attention to metrics buyers will scrutinize like:
Growth rate
The year-over-year percentage increase in overall revenue shows how fast the business is expanding.
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization, a measure of operating profitability that removes the effects of financing and accounting decisions.
Revenue
Total sales dollar amount the business collects from customers purchasing its products or services.
% revenue recurring
The percentage share of revenue that repeats consistently quarter-to-quarter or year-to-year. Recurring revenue indicates stability.
Gross margin %
Gross profit as a % of revenue, which indicates the profitability of the actual products and services before operating expenses.
Customer concentration
If a significant % of total revenue comes from a small number of large clients, buyers may perceive risk of sudden declines if key accounts are lost. This can be an indicator of revenue stability.
Know Your Numbers Before You Start
Having clean financials is essential. Our free valuation calculator helps you understand what metrics buyers care about and what your business might be worth.
Should You Use a Business Broker? Pros and Cons
Conventional wisdom says you need a broker. We challenge that assumption, but with nuance.
Brokers typically take 10-15% of the sale price. For complex deals over a certain price point or in highly specialized industries, a skilled broker could be worth the cost. They can help you navigate sophisticated structures and manage multiple bidders. But for most small businesses under $10M, the value proposition is less clear. Many brokers simply make matches, provide templates, and cash checks.
At a minimum, you should hire a competent attorney and accountant to advise you during the sale process. The decision around a general deal advisor (also known as a broker, intermediary, or investment banker) depends on your deal's complexity and your comfort level.
A Note on Incentives
Brokers don't have the same incentives you do
Less incentive to find the right kind of buyer for non-financial factors
Incentive to sell as quickly as possible, which may not fit your goals
Take 10%+ cut that may not justify the value provided
Where to Find an Intermediary
The intermediary market is heavily fragmented. Organizations and certifications to research:
Accredited in Business Valuation (ABV)
Alliance of Mergers & Acquisitions Advisors (AM&AA)
Association of Corporate Growth (ACG)
Certified Valuation Analyst (CVA)
CM&AA Certification
International Business Brokers Association (IBBA)
M&A Source M&AMI Certification
Our Recommendation
At Rejigg, we believe that you'll typically get better results by connecting directly with the right kinds of buyers. If you do decide to use an intermediary, look for ones who have completed deals similar to yours in size and industry, work on a referral basis or have verified track records, and specialize in your region.
Frequently Asked Questions
What documents do I need to sell my business?
Key documents include 2+ years of financial statements (income statements, balance sheets, cash flow), tax returns, organizational details, customer information, and growth projections. You may also need employee org charts, supplier agreements, and asset lists.
How do I value my small business?
Most small businesses are valued using multiples of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Multiples vary by industry, size, and growth rate. Our free valuation calculator can give you an estimate.
Should I use a business broker?
It depends on your deal's complexity and comfort level. Brokers charge 10-15% and can help with complex deals. For most small businesses under $10M, the value proposition is less clear. At minimum, hire a competent M&A attorney and accountant.
What metrics do buyers look at most?
Buyers scrutinize growth rate, EBITDA, revenue trends, recurring revenue percentage, gross margins, and customer concentration. High customer concentration (40%+ from one client) is a red flag.
How do I calculate EBITDA for my business?
Start with net income, then add back interest, taxes, depreciation, and amortization. Also add back owner compensation above market rate, one-time expenses, and personal expenses run through the business. This gives you "adjusted EBITDA" or Seller's Discretionary Earnings (SDE).
What is customer concentration and why does it matter?
Customer concentration measures how much of your revenue comes from your largest customers. If 40%+ comes from one customer, buyers see risk: losing that customer could tank the business. Diversifying your customer base before selling can significantly increase value.
How far back should my financial records go?
At minimum, have 2-3 years of detailed financial statements. For seasonal or cyclical businesses, monthly financials are preferred. The more historical data you can provide, the more confident buyers will be in your numbers.
What is the difference between a broker and an M&A advisor?
Business brokers typically handle smaller deals (under $5M) and focus on matching buyers and sellers. M&A advisors (investment bankers) handle larger, more complex transactions and provide strategic advice, valuation analysis, and deal structuring. Fees differ accordingly.
Get Your Business Ready to Sell
Rejigg helps owners prepare for and navigate the sale process. Connect with pre-vetted buyers on your terms.
Get Started Selling