Selling a Business

How to learn with this guide

1. Read each explanation, then repeat the worked example without looking.
2. Follow the three-step method aloud and answer the check.
3. For feedback and a reworded attempt, return to the interactive lesson.
4. At the end, explain how the idea applies to your own industry.

LESSON 1 OF 4

Make the business transferable

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

Concise briefing

A buyer needs evidence that customers, suppliers, staff, licenses, systems, and finances can continue after the owner leaves. Starting preparations early gives time to fix records and document repeatable processes.

Worked example

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.

Repeatable method

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.

LESSON 2 OF 4

Support the valuation

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

Concise briefing

Valuation can use earnings, assets, and market comparisons, each with assumptions. Buyers test adjustments, recurring revenue, customer concentration, and capital needs. One multiple does not determine a fair outcome by itself.

Worked example

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.

Repeatable method

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

LESSON 3 OF 4

Compare offers beyond headline price

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

Concise briefing

A $1m all-cash offer and a $1.1m offer with future earn-out are not equivalent. Define what must happen to receive deferred funds and who controls the metric. Consider taxes, debt payoffs, fees, working capital, and indemnity with advisers.

Worked example

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.

Repeatable method

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.

LESSON 4 OF 4

Close and transfer responsibly

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

Concise briefing

Closing documents must reflect the agreed assets or interests, liabilities, consents, employee arrangements, records, and payment. The IRS treats sales of business assets according to their classification; tax planning and allocation need professional review. Handoff duties should be specific.

Worked example

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.

Repeatable method

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

Final review

Close your notes and answer these in the interactive course. Revisit any missed lesson before attempting the reworded check.

1. Why prepare financial source records before marketing a sale?
2. Which number is guaranteed under an earn-out?
3. A sale includes inventory, equipment and goodwill. Who should review tax allocation?

Use it in your setting

Replace one fictional example with facts from your field. Name the decision, evidence needed, and the first assumption to verify.

All examples are educational. This printout does not create a verified grade, enrollment, or credential.

Sources and further reading

Original Aim High Hero explanations and fictional exercises. External sources do not endorse this course.

• U.S. Small Business Administration — Manage your business and plan an exit
• Internal Revenue Service — Sale of a business
• SCORE — Sell your business
• SEC — Exit strategies and liquidity