How to Sell Your Small Business: A 6-Month Timeline from Valuation to Closing

Selling a business is the single largest financial transaction most entrepreneurs will ever make. But too many owners start the process just weeks before they want to close — and leave 15-30% on the table as a result.

Month 1: Valuation and Reality Check

Before you tell anyone you're selling, you need to know what your business is actually worth — not what you think it's worth.

• Run a professional valuation using multiple methods (asset, income, and market approaches). Most small businesses sell for 2-4x SDE (Seller's Discretionary Earnings), not revenue multiples.
• Recast your financials. Many owners run personal expenses through the business. A quality-of-earnings review identifies add-backs that increase your adjusted EBITDA.
• Benchmark against industry multiples. A SaaS company at $2M ARR trades very differently from a manufacturing business at $2M EBITDA. Know your comps.
• Try Scouvo's free Business Valuation Calculator for a baseline estimate based on your revenue, EBITDA, and industry.

Month 2: Preparation and Clean-Up

This is where deals are won or lost. Buyers will find every skeleton in your closet — beat them to it.

• Organize financial records. At minimum: 3 years of P&Ls, balance sheets, tax returns, and monthly bank statements.
• Document your operations. Write SOPs for key processes. If the business can't run without you, it's worth less.
• Resolve legal issues. Outstanding lawsuits, unclear IP ownership, and unsigned contracts are deal-killers.
• Review customer concentration. If one customer represents >20% of revenue, buyers will discount heavily. Diversify if possible.

Month 3: Assemble Your Deal Team

You need professionals who've done this before. The cost of a bad advisor is measured in percentage points of your sale price.

• Business broker or M&A advisor — especially for deals under $5M where brokers add the most value in buyer sourcing.
• Transaction attorney — not your general corporate lawyer. Find someone who closes 10+ deals/year.
• CPA with M&A experience — tax structure (asset vs. stock sale) can swing your net proceeds by 20%+.
• Wealth manager — start planning before the wire hits. The tax clock starts at closing.

Month 4: Buyer Outreach and Marketing

Most small businesses sell to strategic buyers (competitors, suppliers, customers) or individual buyers (search fund entrepreneurs, retiring executives) — not private equity.

• Create a blind profile — a 2-3 page teaser that describes the business without naming it. Enough to generate interest without compromising confidentiality.
• Build a target buyer list — competitors, adjacent businesses, private equity add-on targets, individual buyers.
• Run a confidential process. Use NDAs before disclosing the company name. Stagger information release.

Month 5: Due Diligence and Negotiation

Once you have a signed LOI (Letter of Intent), the real work begins. Typical diligence takes 60-90 days.

• Prepare a data room with organized folders: financial, legal, HR, customer contracts, IP, IT systems.
• Expect the QoE (Quality of Earnings). Buyers will hire an accounting firm to verify your numbers. Every adjustment you claimed will be scrutinized.
• Negotiate the purchase agreement. Price is just one term. Reps & warranties, indemnification caps, earnout structure, and non-compete scope all matter.

Month 6: Closing and Transition

Closing day is anticlimactic — it's mostly wires and signatures. The real work is the transition.

• Plan a transition period (typically 30-90 days). Buyers want you to introduce key customers and transfer institutional knowledge.
• Notify stakeholders — employees first, then customers, then vendors, then the public (if applicable).
• Execute your post-sale financial plan. The proceeds need to be deployed thoughtfully — the average small business seller has 10-15 years of post-sale living to fund.

The #1 Mistake Sellers Make

Waiting too long to start. The businesses that sell for premium multiples are the ones that spent 1-2 years preparing to sell — cleaning up financials, reducing owner dependence, diversifying customers, and understanding their market position. If you're thinking about selling in 2027, start preparing today.