How to Sell a Small Business

by Contributor - Updated September 26, 2017

How to Sell a Small Business. When you sell your small business, you must consider several factors to sell all of its assets at fair market value, realize a profit and comply with federal regulations. Here are some tips to get you started.

Hire a Certified Public Accountant (CPA) to prepare your profit and loss statements and prospectus. This ensures accuracy and demonstrates the market value of the business to potential purchasers.

Retain an attorney to prepare the Contract of Sale. Unlike real estate transactions, selling a business involves many more complex variables and far less standardization in the language of the contract.

Consider hiring a broker to sell your small business, which can save you time and give you anonymity while the sale is pending. The broker may also have better negotiating skills. Expect to pay a broker's fee of about 10 percent of the purchase price at closing.

Know the tax implications if you sell only a part of your small business, for example, stock interests, a market segment or partnership rights. Refer to the Internal Revenue Service for more information (see the Resources section below).

Tips

  • Consider selling your small business to a large corporation rather than to an individual. Corporations will invest in a small business based on projected earnings, or to strategically use the acquisition to hedge into a market share of a specific product or service. Insist that potential buyers sign confidentiality agreements to protect proprietary information pertaining to your business. If you are to provide continued management services to the new owner of the business, include this arrangement in the Contract of Sale or compose a separate agreement.

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