Planning to sell? These 15 valuation FAQs cover what you need to know before listing—from calculating your number to negotiating the final price.
Prepare for Your Sale
Quick Answers (Top 5 Most Common Questions)
1. How do I determine my asking price?
Calculate SDE, determine your multiple based on five factors, then add 5-10% for negotiation room. Example: $100K SDE x 3.0x = $300K target, list at $315K-$330K.
2. What documents do I need?
12-24 months P&L, bank statements, analytics, tax returns, supplier contracts, and add-back schedule. Organize before listing.
3. Should I improve my business before selling?
Yes. Spend 90 days on traffic diversification, owner hours reduction, and SOP documentation. These improvements can add 0.3x-0.7x to your multiple.
4. Should I use a broker?
For businesses over $100K, yes. Brokers create competitive bidding and often recover their 8-15% fee through a higher price. See our broker guide.
5. What price can I realistically expect?
2.5x-3.5x SDE for most businesses. Strong businesses: 3.5x-4.0x. Weak businesses: 1.5x-2.0x. Be honest with your assessment.
Advanced Valuation Questions
6. How do I document my add-backs?
Create an add-back schedule with receipts. Every item needs documentation: salary records, expense receipts, one-time invoices. See our add-backs guide.
7. Should I disclose weaknesses?
Yes. Buyers find everything during due diligence. Disclosing upfront builds trust and allows you to frame the issue with your mitigation plan.
8. How do I handle lowball offers?
Respond with data. Show your SDE calculation, factor scores, and comparable sales. Never get emotional. Counter with your target and negotiate professionally.
9. What’s the best time to list?
October-November, when Q4 revenue is visible. Buyers see the seasonal spike and budget for January-February closing.
10. Should I sell to the first serious buyer?
Not necessarily. Multiple interested buyers create competition and drive up price. But don’t reject a reasonable offer hoping for a better one—that’s how sellers end up accepting less months later.
Timing & Process Questions
11. How long from listing to closing?
60-120 days typical. Preparation before listing takes 3-6 months. Budget the full timeline.
12. What happens during escrow?
Buyer deposits funds with a neutral third party. You transfer assets. Buyer verifies everything works. Escrow releases funds. Typically 3-7 days.
13. What fees should I expect?
Broker commission (8-15%), escrow fees (0.89%-3.25%), legal costs ($1,000-$5,000). Total: 10-20% of sale price. Calculate net proceeds.
Risk & Red Flags
14. What scares buyers away?
Messy financials, hidden problems, unresponsive communication, and unrealistic pricing. Professional presentation matters.
15. What guarantees a successful sale?
Accurate financials, documented systems, diversified traffic, reasonable pricing, and responsive communication. Get these right and your sale will likely close.
Prepare for Your Sale