The first step to a successful business sale is to understand your motivations and then to prioritize them before you even put your business on the market. Once you have prioritized your motivations, it’s time to choose your route. There are numerous options for how to sell your small business and each one will vary in how effectively they appease your pre-sale wants and needs. Follow these steps to determine which route works best for you:

Step 1. Find the sale approaches that best match with your sale motivations.

By this step in the business sale process, you should have determined which aspects of the transition are most important to you. Whether your top motivation is selling immediately, receiving the highest price possible or staying involved post-sale, you’re next goal should be to find which sales approach best matches those needs.

The following chart will help you align those motivations with various sale approaches. Begin on the left side of the chart, focusing on the entry that reflects your top priority. Checkmarks indicate which sale approaches are most apt to achieve your desired outcome.




Sell to an existing partner

Sell partially to a new co-owner or partner

Sell all or partially to a supplier, competitor or other business

Sell to an outside individual

Transition to next-generation family

Sell to key employee

Sell to employees


Step 2. Understand what's involved with each sale approach

Once you determine which sale approaches align best with your sale objectives, you're ready to zero in on the approach that seems to fit your business and personal situation best.

Selling to an existing partner

•    Approach: Most partnerships are launched with legal documents that include a buy-sell agreement outlining how one partner will sell to the other or others. If your partnership includes such an agreement, it details the price and procedure for selling your portion of ownership.
•    Selling advantages: Depending on circumstances, selling to an existing partner allows a pre-defined route for selling, departing and receiving a payoff, and likely results in little disruption to clients or staff.

Selling to another business

•    Approach: Businesses or private equity groups acquire businesses - in full or in part - for strategic rather than financial reasons. They aren't looking to fund a new owner's salary, but rather to integrate the offerings of the purchased business in order to expand the capabilities, market reach, competitiveness and profitability of an established business that is usually larger and stronger than the business being purchased.
•    Selling advantages: A business-to-business sale allows the possibility of a strong selling price and potential for an immediate payoff, though the sale terms often require your ongoing involvement with your business.

Selling to an individual

•    Approach: Individuals buy rather than start businesses to avoid start-up risk, to enjoy the immediate benefits of sales and cash flow, and to benefit from established systems, clientele, and reputation. Also, thanks in part to seller financing, it's easier to finance a business purchase than a business start-up.
•    Selling advantages: If your business is in strong condition and attractive to buyers, selling to an individual provides the greatest opportunity to achieve the greatest range of sale objectives, so long as you keep in mind that some objectives conflict with others. For example, the need for all-cash at closing rarely supports a high selling price.

Transitioning to next-generation family members

•    Approach: This sale approach is followed by roughly a third of all small business owners, who work with their attorneys and accountants to determine the often-complex plans for valuation, business transfer and related estate planning issues.
•    Selling advantages: While a sale to family members takes advance planning, requires a generous timeframe, and rarely achieves a top-dollar payoff, ultimately it allows the seller flexibility in determining future involvement and usually provides continuity for staff and clients.

Selling to a key employee

•    Approach: This sale approach transitions ownership to an employee who wants and is able to make the necessary investment to take over your business. It typically begins with a legally binding partnership and buy-sell agreement that details the terms of the sale at some point in the future
•    Selling advantages: Like an inner-family sale, selling to a key employee rarely achieves a top-dollar price, but ultimately it allows the seller flexibility in determining future involvement and likely provides ongoing continuity for staff and clients.

Selling to employees

•    Approach: A sale to employees involves a tax-qualified, defined employee benefit plan, called an Employee Stock Ownership Plan (ESOP), through which employees buy shares of the business quickly or over a long period of time, depending on how the transition is structured.
•    Selling advantages: Though an ESOP requires significant legal planning and advice, it is a tax-advantageous sale approach since proceeds may be tax-free. It also allows a phase-out of the owner's involvement and provides ongoing continuity for staff and clients.

Liquidating your business

•    Approach: Liquidation involves selling assets (possibly with assistance from liquidation sale experts), collecting outstanding receivables, paying off debts, addressing contractual commitments, releasing employees, and finalizing legal and financial obligations to close your business.
•    Selling advantages: For owners of small businesses with significant weaknesses or solvency issues who seek immediate business exits, liquidation is likely the easiest and fastest way to recover some value and invest no further funds or efforts before leaving the business behind.

There are two other approaches for selling a small business: Merging with another business or going public through an initial public offering or IPO. Both these approaches require significant legal and accounting assistance so hiring outside expertise will be a must.

In next week’s installment of “Selling Your Small Business” we’ll help you lay out your business sale goals and objectives. 

Editor’s Note: This article is the fourth piece in a series taken from’s Guide to Selling Your Small Business. The guide is a comprehensive manual to help small business owners maximize their success when the day to sell arrives. Each Wednesday, will publish a new section of the guide outlining’s best practices, from the initial planning stages of a sale all the way through negotiations and post-sale transition.