How to Sell a Small Business in New York
Selling a small business in New York involves much more than finding someone willing to buy it. Business owners need to understand what their company may be worth, prepare the business for sale, protect confidential information, identify qualified buyers, negotiate the terms of the transaction and successfully navigate due diligence and closing.
If you're considering selling a small or mid-sized business in Westchester County, the Hudson Valley, New York City or surrounding New York markets, understanding the business sale process before going to market can help you prepare for a smoother transaction.
You don't have to be ready to sell today. Understanding the steps involved can help you determine whether now is the right time — or what you may need to do before eventually bringing your business to market.
How the Business Sale Process Works
1. Start With a Confidential Consultation
The process begins with a private conversation about your business, your financial goals, why you're considering selling and your desired timeline.
You don't have to be ready to sell.
Some business owners begin exploring their options years before they ultimately exit. An early conversation can help you better understand the process and identify issues that may need to be addressed before bringing the business to market.
2. Determine What Your Business May Be Worth
One of the most important steps when preparing to sell a small business is developing a realistic understanding of its potential market value.
We review relevant financial and operational information to better understand the business and what a qualified buyer may be willing to pay.
Depending upon the company, this may include:
- Revenue
- Seller's Discretionary Earnings (SDE)
- EBITDA
- Cash flow
- Owner add-backs
- Assets and equipment
- Industry valuation multiples
- Revenue and profitability trends
- Customer concentration
- Owner involvement
- Growth opportunities
- Comparable business transactions
Not sure what your business may be worth?
Learn more about Business Valuation in Westchester & New York
3. Prepare the Business for Sale
Before introducing the company to prospective buyers, we identify the information needed to properly present the opportunity.
This may include normalized financial information, operational details, staffing, customer information, assets, competitive advantages and potential growth opportunities.
The objective is to help a prospective buyer understand not only what the business has done historically, but also why the business may represent an attractive acquisition opportunity.
4. Market the Business Confidentially
Confidentiality can be extremely important when selling a privately held business.
Employees, customers, vendors and competitors often do not need to know that an owner is considering a sale.
A business can therefore be marketed without publicly identifying sensitive information about the company.
The objective isn't simply to generate inquiries.
It is to attract qualified prospective buyers while protecting the confidentiality of the business.
5. Screen and Qualify Potential Buyers
Not every person who responds to a business-for-sale opportunity is a qualified buyer.
Potential buyers can be screened for financial capability, experience and seriousness before confidential information about the company is disclosed.
Confidentiality agreements may also be required before prospective buyers receive identifying or sensitive information about the business.
This helps protect the seller while allowing serious buyers to evaluate the opportunity.
6. Evaluate Offers and Negotiate the Transaction
When a qualified buyer is ready to move forward, the next step is evaluating and negotiating the offer.
Purchase price is obviously important, but it isn't the only consideration.
A business sale may also involve:
- Cash at closing
- Seller financing
- Bank or SBA financing
- Working capital
- Inventory
- Equipment
- Transition assistance
- Training
- Contingencies
- Lease terms
- Real estate
- Non-compete provisions
- Timing of the closing
Understanding the complete deal structure can be just as important as understanding the headline purchase price.
7. Navigate Due Diligence and Closing
After an offer is accepted, the buyer typically begins a more detailed review of the business through the due diligence process.
This may include reviewing financial statements, tax returns, leases, contracts, payroll, equipment, licenses and other financial or operational information.
I help coordinate the transaction with the seller, buyer, attorneys, accountants, lenders and other professionals involved as the transaction moves toward closing.
Considering Selling Your Business in New York?
You don't need to know exactly when you want to sell before beginning the conversation.
Whether you're considering selling now, planning an exit within the next few years or simply wondering what your business may be worth, the first step can be a confidential conversation about your company and your options.
Stephen Zondorak
Business Broker | Real Estate Broker
Astor Lane Realty
Serving business owners throughout Westchester County, the Hudson Valley, New York City and surrounding New York markets.
DISCUSS SELLING MY BUSINESS
Confidential. No obligation. No pressure to sell.