Selling a trade business usually takes months, not weeks, and it goes through a few stages: figuring out what it's worth, finding a buyer, agreeing on a deal, letting the buyer check everything, and then handing it over. Most owners only do it once, so almost none of them know what to expect going in.
Knowing the steps won't make it easy. It does keep you from being caught off guard.
Who buys trade businesses?
Usually one of a few kinds. It might be a competitor who wants your customers and your crew. It might be someone on your crew or in your family. Or it's an investor buying up businesses in your trade, and each one pays in different ways.
What happens after you find a buyer?
First you agree on a price and the main terms, usually in a letter that isn't final yet. Then the buyer goes through everything, including your books, your taxes, your customers, your contracts, your equipment and your licenses. This step is called due diligence. It's where deals fall apart when the numbers don't match.
If it all checks out, the deal closes. Then there's usually a handoff period where you stay on for a while to introduce the new owner to customers and the crew.
What surprises owners the most?
How little of the price comes from how good the work is. Owners expect to be paid for their skill. Buyers mostly pay for steady profit, clean records and a business that keeps running after the owner leaves.
The other surprise is that the price isn't always paid all at once. Part of it can be spread out over time, or tied to how the business does after the sale.
One thing to try this week
See how ready your paperwork is.
- Ask yourself whether you could hand a stranger your last three years of numbers tomorrow.
- Check whether your licenses, insurance and any customer contracts are current and in one place.
- Think about who on your crew would stay if you left, and whether they know it.
If a buyer called tomorrow, how long would it take you to show them your books?
Common questions
- What are the steps to selling a small business?
- Figure out what it's worth, find a buyer, agree on the main terms, let the buyer check everything, then close and hand it over.
- What is due diligence when selling a business?
- The stretch where the buyer checks your books, taxes, customers, contracts, equipment and licenses before the deal is final.
- Do you get paid all at once when you sell a business?
- Not always. Part of the price can be paid over time or tied to how the business does after the sale.