Selling a small business is no easy feat. It is a complex process that requires knowledge and expertise. This article will provide an overview of the two main methods of selling a small business, namely a stock sale and asset sale, as well as offering tips and advice on how to structure a sale in order to maximize the return on investment.

How to Structure the Sale of a Small Business?

When it comes to selling a small business, there are two main approaches: a stock sale, where the buyer purchases company stock from shareholders, and an asset sale, where the buyer purchases the company’s assets from the entity itself. Generally speaking, buyers typically prefer an asset sale structure because, under IRS regulations, the buyer will receive a step-up in basis of the selling company’s depreciable assets.

When structuring the sale, it is important to consider the following factors:

  • Type of business
  • Amount of debt
  • Expected return on investment
  • Tax implications
  • Legal issues
  • Transfer of intellectual property

To ensure a successful sale, it is essential to work with a professional business broker or advisor to guide you through the process.

7 Steps to Selling Your Small Business

The following are seven key steps to selling your small business:

  • Reasons for the Sale – Before beginning the process, it is important to determine why you are selling the business.
  • Timing of the Sale – Determine the timeline for the sale and plan accordingly.
  • Business Valuation – A professional business valuation is essential to determine the fair market value of the business.
  • Should You Use a Broker? – A business broker can help facilitate the sale and ensure that all legal documents are in order.
  • Preparing the Business for Sale – It is important to prepare the business for sale, including reviewing financial statements, tax returns, and contracts.
  • Marketing the Business – A business broker can help you market the business to potential buyers.
  • Negotiating the Sale – Negotiate the sale with potential buyers and ensure that the terms are mutually beneficial for both parties.

Selling a small business is a complex process and requires knowledge and expertise. Working with an experienced business broker or advisor can help ensure that the sale is structured properly and that the return on investment is maximized. For more information on selling a business, please visit

What is the most effective approach to selling a business?

The two main options available are an asset sale, where the buyer acquires certain assets and is liable for the obligations stipulated in the sales agreement, and a stock sale, in which the buyer purchases the seller’s shares in the corporation to gain ownership of the legal entity.

Things to take into account when putting your small business up for sale.

Non-Compete Agreement. …
Tax Implications.

Examining the structure of the sale. Drafting a letter of intent. Analyzing the net profits. Examining the buyer’s background. Including an earn-out provision. Investigating any necessary state regulations. Setting up a functioning operation. Verifying S election status. Agreeing to a non-compete agreement. Understanding the tax implications.

What steps do you take to set up a small business purchase?

1. Locate a company to buy.
2. Ascertain the worth of the business.
3. Make an agreement on a purchase price.
4. Submit a Letter of Intent.
5. Conduct a thorough investigation.
6. Obtain the necessary funding.
7. Finalize the deal.

What are the fundamental stages involved in selling a business?

Go through the process in the opposite order:
Closing & Agreement of Sale. …
Buyer’s Due Diligence. …
Buyer’s Letter of Intent. …
Negotiation & Asking Price. …
Information for the Buyer. …
Reverse Due Diligence.