Selling a Business

Facilitation plan

Begin by naming the four outcomes. For each lesson, model the fictional decision, reveal the method one step at a time, invite an individual attempt, and discuss why the distractors fail. Allow a fresh attempt after feedback. Reserve the final three scenarios for independent practice.

1. Opening and prior knowledge: 5 minutes.
2. Four guided lessons: about 5–7 minutes each, plus discussion.
3. Final check and targeted remediation: 10–15 minutes.
4. Transfer prompt: ask how the method changes with the learner’s industry facts.

Use the text-first study guide as the accessible alternate format. No recorded or live delivery is assumed.

Make the business transferable

Outcome: Spot owner dependence and missing records before going to market.

Demonstrate

A distributor has strong sales but every retailer relationship sits in the owner's phone. The seller documents account history, assignability, route procedures, and named handoffs before sharing confidential materials with buyers.

1. Organize reliable financial and operating records.
2. Identify relationships that depend on the owner.
3. Plan the people, systems, and approvals needed after closing.

Ask and observe

Which weakness most threatens transferability?

Expected choice: All major relationships exist only with the owner and have no handoff plan. Untransferred relationships can undermine the buyer's ability to operate after closing.

If missed: Explain the calculation or decision aloud; then present “A seller is the only person who knows supplier terms. What should happen?” Correct choice: Document agreements and a handoff plan.

Discussion prompt: Choose the gap that could reduce buyer confidence. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.

Support the valuation

Outcome: Separate an asking price from evidence of transferable earnings.

Demonstrate

The seller asks $1m based on adjusted earnings of $250k. Buyers find $40k of proposed add-backs without records; the seller reconciles them instead of defending the same multiple with unsupported figures.

1. Prepare source financials and explain adjustments.
2. Identify concentration and recurring versus one-off sales.
3. Model valuation sensitivity to unsupported assumptions.

Ask and observe

A $40k earnings add-back lacks support. What should the seller do?

Expected choice: Document and reconcile it or exclude it from the supported case. A buyer will test add-backs against actual records; unsupported adjustments weaken confidence.

If missed: Explain the calculation or decision aloud; then present “One unusual owner expense is included in earnings. How is it handled?” Correct choice: Explain and document the adjustment.

Discussion prompt: Identify the number that needs evidence before buyer outreach. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.

Compare offers beyond headline price

Outcome: Evaluate cash at closing, contingencies, seller financing, and risk.

Demonstrate

Offer A pays $900k at closing. Offer B pays $800k plus up to $200k if next year's sales target is achieved. The owner compares likely after-cost proceeds and the terms of the contingent payment, not just the maximum headline.

1. Break each offer into cash, deferred and contingent amounts.
2. Inspect conditions and who controls performance.
3. Estimate costs and after-tax proceeds with advisers.

Ask and observe

Which offer term requires special downside analysis?

Expected choice: An earn-out dependent on next year's sales. An earn-out depends on future conditions and measurement rules; it is not guaranteed cash.

If missed: Explain the calculation or decision aloud; then present “A buyer offers $300k now and $200k if profit rises. What is contingent?” Correct choice: The $200k tied to profit.

Discussion prompt: Choose which offer question reveals payment uncertainty. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.

Close and transfer responsibly

Outcome: Coordinate documents, tax allocation, approvals and post-close duties.

Demonstrate

Before closing, the seller reconciles inventory, confirms consent for a key lease, reviews the allocation and tax questions with a CPA, and schedules customer introductions under negotiated terms.

1. Reconcile final balances and asset schedules.
2. Confirm required consents and tax advice.
3. Document transition actions and verify received funds.

Ask and observe

Which issue deserves resolution before a scheduled close?

Expected choice: A required lease assignment consent. The buyer may need the premises to operate; the required consent affects the closing plan.

If missed: Explain the calculation or decision aloud; then present “A major contract requires approval to transfer. What should seller and buyer do?” Correct choice: Resolve the approval under the agreement.

Discussion prompt: Identify a task that cannot safely be left as a vague promise. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.