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Selling your company to a third party is a major milestone that requires strategic planning, accurate financial preparation, and careful legal documentation. Whether you’re exiting for retirement, pursuing new ventures, or unlocking the value you’ve built, following a structured process will help you maximize your return and ensure a smooth transition.

Step 1: Review Your Operating Agreement

Your Operating Agreement (for LLCs) or corporate bylaws (for corporations) outlines how ownership transfers are handled. Review it carefully to understand:

• Any restrictions on selling ownership interests

• Procedures for approving a new owner

• Rights of existing members or shareholders (such as first refusal rights)

This ensures the sale complies with your company’s governing documents.

Step 2: Prepare Accurate Financial Statements

Buyers will want a clear picture of your company’s financial health. Prepare detailed, up-to-date financial documents, including:

• Balance Sheet – Assets, liabilities, and equity

• Profit & Loss Statement (Income Statement) – Revenue, expenses, and profitability

• Cash Flow Statement – Cash inflows and outflows

Well-organized financial records build buyer confidence and speed up the due diligence process.

Step 3: Determine the Value of Your Business

A fair and accurate business valuation is critical for setting the asking price. Common valuation approaches include:

• Asset-based valuation

• Income-based valuation (discounted cash flow)

• Market-based valuation (comparable sales)

You may choose to work with a professional appraiser or CPA to obtain an objective valuation.

Step 4: Market Your Business to Buyers

Develop a marketing strategy to attract qualified buyers. Options include:

• Listing your business on online business marketplaces

• Working with a business broker who has access to industry contacts

• Reaching out to potential strategic buyers (competitors, suppliers, or investors)

A well-structured marketing plan increases visibility and helps you find the right buyer faster.

Step 5: Negotiate and Draft the Sale Agreement

Once a buyer shows serious interest:

• Negotiate key terms, including sale price, payment structure, non-compete clauses, and contingencies.

• Draft a formal Sale Agreement (Purchase Agreement) with the help of legal counsel.

This document protects both parties and ensures all negotiated terms are legally binding.

Step 6: Close the Sale

The closing process involves:

• Transferring ownership and assets to the buyer

• Settling outstanding debts and obligations

• Updating state filings, business licenses, and IRS records

• Finalizing payment and distributing proceeds

At this stage, legal and financial professionals play a key role in ensuring compliance and a smooth transfer.

Costs Involved in Selling Your Company

• Legal Fees: For drafting, reviewing, and finalizing contracts.

• Valuation Costs: Professional appraisers may charge a flat fee or hourly rate.

• Broker Fees: Business brokers typically charge 5%–10% commission on the sale price.

• Tax Liabilities: Be aware of capital gains tax, state taxes, and potential recapture taxes that apply when selling your business.

Final Thoughts

Selling your business to a third party is a complex but rewarding process. From reviewing your Operating Agreement to negotiating terms and closing the deal, each step requires careful planning. By preparing financial statements, obtaining a proper valuation, and seeking professional guidance, you can maximize your sale price and minimize risks.

For a seamless transaction, consider working with a business attorney, accountant, or broker who specializes in business sales.