Selling and Buying a Business Frequently Asked Questions (FAQs)

Questions around valuations, negotiations, taxes, financing, and legal steps often come up — and it’s not always clear where to start or who to trust.

That’s why we created this guide.

At SMB.co, we work with thousands of business buyers and sellers every month, and we’ve compiled the most frequently asked questions from real people navigating real transactions. These FAQs are designed to break down complex topics into straightforward, actionable advice — no jargon, no fluff.

Use this guide to:

• Understand the steps to buy or sell a business, from valuation to closing
• Learn the common pitfalls and how to avoid them
• Decode the financial and legal terms you’ll encounter
• Make sense of key strategies like seller financing, due diligence, and tax planning
• Explore platform-specific tips for listing or searching on SMB.co

Whether you’re trying to determine what your business is worth, wondering if you need a broker, or curious about how to attract qualified buyers — you’ll find answers here.

Let’s dive into the most important questions asked when buying or selling a business.

Selling a Business FAQs

1. How do I sell my small business?
   First, you need to understand what your business is worth. You can do this through a business valuation. Then, put together your financials, gather your support team (accountant, lawyer, broker, and more), list your business on a marketplace like SMB.co, and connect with qualified buyers. Check out this full guide to selling your business.
   
   
2. What is the best way to sell a business fast?
   To sell fast, price it right using a data-backed valuation, prepare clean financial records, and list it where buyers are actively looking like SMB.co. Check out this blog post to learn more about how to sell your business quickly.
   
   
3. How do I know what my business is worth?
   Start with a free Bestimate at SMB.co — think of it like a Zillow Zestimate, but for your business. It gives you an instant valuation range based on your revenue, profit, and industry.
   
   To get an even more accurate estimate, you can claim your business on SMB.co, securely connect your financials, and receive a data-driven valuation tied to your actual numbers — all at no cost. This helps you understand what your business might sell for in today’s market and how buyers are likely to view its value.
   
   
4. What documents do I need to sell my business?
   You’ll need your profit and loss statements, tax returns, lease agreements, inventory lists, and legal documents showing ownership.
   
   
5. Do I need a business broker to sell my business?
   Not always. Platforms like SMB.co make it easy to connect directly with qualified buyers, especially if your business is straightforward and you’re comfortable managing the process.
   
   However, if your sale involves complex terms, emotional dynamics, or you simply want a professional to handle everything — a business broker can be a valuable partner. They can help you price your business, manage buyer conversations, protect confidentiality, and close the deal faster.
   
   For a deeper look at the pros, cons, and when to use one, check out our blog: Why Use a Business Broker. Business brokers can also help you unlock more deal flow. Check out this blog post to learn how.

6. How long does it take to sell a small business?
   It usually takes 6 to 12 months, depending on how ready your business is and how quickly buyers respond. Check out this blog post that discusses the top 5 mistakes that owners make when selling their business which could then make this process take way longer than it needs to be. At SMB.co, our goal is to cut the time it takes to sell your business down drastically by connecting you with the right buyers, at the right time and supporting you throughout the whole process.
   
   
7. When is the best time to sell my business?
   The best time to sell is when your business is performing well — with stable revenue, growing profits, and a solid team in place. That’s when buyers see the most value and competition for your business can drive a better outcome.
   
   At SMB.co, our mission is to help small business owners claim their business, grow with confidence, and prepare for a successful exit when the time is right. Even if you’re not ready to sell today, taking steps now to strengthen your business can lead to a smoother, more rewarding sale down the road.
   
   
8. Can I sell my business if I still have a loan?
   Yes, you can sell your business even if you still have a loan. In most cases, the loan is paid off at or before closing using proceeds from the sale. However, in some situations, the buyer may be willing to assume the loan — especially if the terms are favorable and the lender approves the transfer. The key is to be transparent early and work with your lender and buyer to structure the deal properly.
   
   
9. Should I tell my employees I’m selling?
   It depends on your goals and the nature of your business. Some owners wait until a deal is signed to avoid disruption, while others share early to prepare their team and ensure a smoother transition. In some cases, your employees - or people they know - might even be potential buyers, making transparency a strategic move. It’s a big decision, so talk with your advisor or legal counsel about what’s best for your situation.
   
   
10. What are buyers looking for in a business?
    Most buyers are drawn to businesses with stable revenue, clean financials, loyal customers, and operational independence - meaning the business doesn’t rely heavily on the owner to function day to day. If you're thinking of selling, these are the traits to focus on strengthening. Want a deeper look at real buyer behavior? Check out our latest data and trends from the marketplace in this blog post.

11. Can I sell a business that’s not profitable?
    Yes — especially if you have strong assets, recurring revenue, or customer contracts. Buyers may see potential even if you're not currently profitable.
    
    
12. How should I prepare for my first buyer-seller meeting?
    The first meeting between a buyer and seller is not about closing the deal — it’s about building trust and learning more about each other. Sellers should be ready to tell their business story clearly (how it started, why it’s successful, and why they’re selling). Buyers should come prepared with thoughtful questions and show genuine interest in the business. Don’t worry about diving into deep financials yet — the goal is to establish fit, rapport, and shared expectations before moving forward. Find out more in this blog post.

Business Valuation

13. What is a business valuation?
    A business valuation is the process of determining how much your business is worth based on factors like income, cash flow, assets, industry, and market conditions.
    
    At SMB.co, we offer a free tool called the Bestimate - think of it like a Zillow Zestimate, but for your business. You can also claim your business, connect your financials, and get a more detailed, data-driven valuation based on your actual performance - all for free.
    
    
14. How do I get a business valuation?
    You can use a tool like Bestimate on SMB.co or hire a valuation expert. Tools are faster and cheaper for a first look. Want to learn about the different ways to value a small business? Check out this blog post.
    
    
15. What makes a business more valuable?
    Recurring revenue, low owner involvement, strong systems, and loyal customers all add value. Check out this blog post for some tips on how to grow your business and make it even more valuable.
    
    
16. How do buyers calculate what a business is worth?
    Most use either a cash flow multiple or discounted cash flow (DCF). They also check past performance and risk. What is a DCF? Find out here.
    
    
17. Can I increase my business value before selling?
    Yes! You can increase your business’s value by improving profitability, reducing how much it depends on you (the owner), and keeping clean, organized financial records. You can also explore the SMB.co community to find vetted partners - like marketing experts, operational consultants, and financial advisors - who can help you grow and position your business for a stronger exit.
    
    
18. What multiple should I use to value my business?
    Multiples vary by industry and deal size. Most small businesses sell for 2–4x their annual cash flow, but SMB.co can help you benchmark against similar deals.

Due Diligence

19. What is due diligence in a business sale?
    Due diligence is the process of reviewing a business’s financials, legal matters, operations, and reputation before buying it. It helps you understand what you're getting and avoid surprises after the deal.
    
    
20. Why is due diligence important?
    It protects you from risk. You might discover hidden debts, lease issues, or customer concentration problems that could affect the business’s value or operations.
    
    
21. What should I look at during due diligence?
    Key areas include:

Financials: Profit/loss statements, tax returns, debt
Legal: Contracts, licenses, lawsuits
Operations: Key employees, suppliers, customer base
Market: Competitors, trends, customer reviews
Technology: Website, software, cybersecurity

22. How long does due diligence take?
    Usually 30 to 60 days, depending on how well-prepared your business is.
    
    
23. What’s the biggest mistake buyers make in due diligence?
    Rushing through it or skipping key areas like lease transfer terms, employee retention, or customer dependencies.
    
    
24. Can I do due diligence myself or do I need help?
    While you can start the process solo, working with an attorney or accountant ensures key risks aren’t missed. Many SMB.co users combine DIY prep with expert review.

Financial Terms and Concepts

25. What is seller financing?
    It’s when you let the buyer pay part of the price over time, like a loan. You get monthly payments with interest. Learn more in this blog post.
    
    
26. What is an earnout?
    An earnout means you get more money later if the business hits certain goals after the sale.
    
    
27. What is working capital in a business sale?
    It’s the money your business needs for daily operations - like cash, inventory, and accounts receivable.
    
    
28. What is EBITDA?
    EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a commonly used financial metric that gives buyers a clear snapshot of your business’s core profitability - before accounting for financing, tax strategies, and non-cash expenses. In simple terms, EBITDA shows how much money your business makes from its operations, and it’s one of the key numbers buyers look at when evaluating what a business is worth.
    
    
29. What is a quality of earnings (QofE) report?
    It’s a detailed report that shows the true, recurring earnings of your business. Buyers use it to check financial health. When buying and selling small businesses, do you need a QofE? Learn more in this blog post.
    
    
30. How much will I pay in taxes if I sell my business?
    It depends on your structure (LLC, S Corp, etc.) and how the deal is structured. A tax advisor can help you minimize taxes.
    
    
31. What’s the difference between an asset sale and a stock sale?
    An asset sale transfers business assets; a stock sale transfers ownership of the entire company. Taxes and risks differ.
    
    
32. What are closing costs in a business sale?
    These include legal fees, broker fees, and sometimes transfer taxes. Buyers and sellers may split them. Check out this blog post to better understand some of the hidden costs associated with a business sale.
    
    
33. What is a letter of intent (LOI)?
    A Letter of Intent (LOI) is a non-binding agreement that outlines the key terms and structure of a potential deal - such as price, payment terms, and transition period - before moving to a final purchase agreement. It’s an important step that signals serious buyer interest and sets the groundwork for due diligence and final negotiations. At SMB.co, we help streamline the LOI process with a robust, easy-to-use LOI template and built-in tools for digital signatures, so buyers and sellers can move forward quickly and confidently - all within one platform.

34. What is an escrow in a business sale?
    It’s a secure account where funds are held until all conditions of the sale are met.
    
    
35. Can I negotiate seller financing?
    Yes, and it’s common. Many sellers are open to flexible terms if the buyer is well-qualified and the deal structure is fair.

Exit Planning

36. What is an exit strategy?
    It’s your plan for leaving the business whether that means selling, merging, or closing.
    
    
37. When should I start planning my exit?
    At least 1–2 years before you want to sell. This gives time to fix issues and improve value. At SMB.co, we have plenty of partners that can aid your business in preparing for a successful exit.
    
    
38. What if my business relies too much on me?
    Buyers see that as a risk. Start training your team and documenting processes to make the business run without you. If your business relies too much on you, this blog post will help guide you in the right direction.
    
    
39. What if I don’t have clean books?
    Work with a bookkeeper or accountant to get them in order before listing your business. You can find a quality partner in the SMB.co Growth Network.
    
    
40. Can I sell part of my business?
    Yes. You can sell a percentage of ownership or a specific product line or location.
    
    
41. How do I protect my business while selling it?
    Protecting your business during the sale process is critical. The most effective way to safeguard sensitive information—like financials, client lists, or trade secrets—is by using Non-Disclosure Agreements (NDAs). NDAs ensure that potential buyers legally agree to keep your business information confidential.
    
    At SMB.co, we simplify this process by providing built-in NDA templates and e-signature tools, so you can securely share confidential details only with vetted, serious buyers—without the legal headache.
    
    
42. What happens after I sell my business?
    You may need to help with the transition for a few months. After that, you're usually free to move on or retire!
    
    
43. Can I stay involved after selling?
    Yes, if the buyer wants you to help during the transition or you can stay as a consultant or minority owner.
    
    
44. What is a transition plan?
    It’s a plan for handing over the business to the buyer. It may include training, customer handoffs, and system access.
    
    
45. What is a non-compete agreement?
    It’s a contract that says you won’t start a similar business nearby for a certain time after selling.
    
    
46. What if I’m not ready to sell but want to explore my options?
    That’s smart planning. You can start by getting a free valuation and building your exit strategy 1–2 years ahead of time to maximize value.
    
    Check out SMB.co’s co-founder & CEO on a podcast talking about a new way to buy and sell a small business.

Listing & Marketing the Business

47. Where can I list my business for sale?
    SMB.co is a trusted small business marketplace that connects you with real, verified buyers.
    
    
48. How do I attract serious buyers?
    To attract serious, qualified buyers, start by listing your business on a trusted marketplace like SMB.co, where real, verified buyers are actively searching. Make sure your financials are clean, your documents are organized, and you're responsive to buyer inquiries.
    
    One of the best ways to stand out is by preparing a Confidential Information Memorandum (CIM) - a professional, detailed overview that tells the story of your business and gives buyers the information they need to take the next step. Not sure where to start? Check out our blog on the SMB.co CIM Generator to see how you can create one in minutes.
    
    
49. Should I keep the sale private?
    It depends. Some sellers keep it quiet to avoid staff concerns. Others are open to find more buyers faster.
    
    
50. What should I include in my business listing?
    Add your revenue, profit, location, industry, asking price, and a short story about your business.
    
    
51. What if my business isn’t profitable?
    You can still sell, especially if you have good assets, loyal customers, or growth potential. Be honest and price it fairly.
    
    
52. How do I write a great business listing?
    Keep it clear and focused: include your numbers (revenue, profit, price), a short business summary, and why it’s a great opportunity. Use keywords like “turnkey” or “passive income” if they apply.

Legal & Final Steps

53. Do I need a lawyer to sell my business?
    Yes, it's smart to have a lawyer review the contract and help with closing.
    
    
54. What is a purchase agreement?
    It’s the legal contract that finalizes the sale. It lists all the terms both parties agree to.
    
    
55. What are reps and warranties in a business sale?
    They’re promises you make to the buyer about the condition of the business. If they’re not true, you could be liable.
    
    
56. What happens if a deal falls through?
    It’s common. Stay ready, get feedback, and move on to the next buyer. SMB.co helps match you with others.
    
    
57. Can I sell my business on SMB.co?
    Yes! You can list your business, get a free valuation, and connect with verified buyers and partners all in one place.

Financing

58. How can I get financing to buy a business?
    You can use traditional bank loans, SBA loans, seller financing, or a mix of them. Each has different requirements and pros/cons. Check out this blog post for more on how to get financing to buy a business.
    
    
59. What’s seller financing?
    Seller financing is when the current owner lets you pay part of the purchase price over time, directly to them, instead of getting a bank loan.
    
    
60. Is seller financing common?
    Yes, especially in small business deals where buyers can’t qualify for full bank financing. It’s flexible and often quicker to close.
    
    
61. What is an SBA loan?
    An SBA loan is a loan partially guaranteed by the Small Business Administration, issued through a bank. It’s designed to make business ownership more accessible with lower down payments and longer repayment terms.
    
    
62. What credit score do I need to get financing?
    For bank loans, you’ll usually need a credit score of 700+. SBA loans generally require 680+. Seller financing may allow for more flexibility.
    
    
63. What’s the typical down payment to buy a business?
    Expect to put down 10% to 30% of the purchase price. Some lenders may allow less if you’re using SBA financing or have strong collateral.
    
    
64. Can I get a loan if I’ve never owned a business before?
    Yes, but you’ll need to show relevant work experience or a strong business plan. Lenders want to see that you can successfully run the business.
    
    
65. How long does it take to get approved for a loan?
    Bank loans and SBA loans can take 30–90 days. Seller financing can move faster, often closing in a few weeks.
    
    
66. What is Discounted Cash Flow (DCF)?
    Discounted Cash Flow (DCF) is a method used to estimate the value of a business based on how much money it’s expected to make in the future — and then "discounting" those future earnings back to today’s value. It’s a way to figure out what a business is really worth based on projected cash flow.
    
    
67. Why do buyers use DCF when valuing a business?
    Because it helps them understand how profitable a business is likely to be over time. Rather than just looking at past performance, DCF takes future cash flow into account — adjusted for risk — which makes it especially useful for growing or high-margin businesses.
    
    
68. How is DCF different from using a multiple of earnings or EBITDA?
    A multiple of earnings looks backward — at what the business made in the past. DCF looks forward — at what the business is expected to earn in the future. While both are helpful, DCF gives a more detailed and customized valuation.
    
    
69. What’s a discount rate, and why does it matter?
    The discount rate reflects the risk of the business and the time value of money. Higher risk = higher discount rate = lower valuation. It’s used to translate future earnings into today’s dollars.
    
    
70. Is DCF the best method for small business valuation?
    It depends. DCF is powerful for businesses with strong, predictable cash flow or clear growth projections. For smaller businesses with inconsistent revenue or simpler financials, a multiple of EBITDA or SDE may be more practical.
    
    
71. Can I calculate DCF on my own?
    Yes, but it can get complex. You'll need cash flow projections, a reasonable discount rate, and some financial modeling skills. Many buyers use tools like SMB.co’s valuation resources to get a starting point or work with financial advisors to run the numbers.

Buying a Business FAQs

72. How do I find a small business to buy?
    You can search marketplaces like SMB.co, work with brokers, or explore off-market opportunities. Be sure to define your criteria first — such as industry, location, size, and budget — to narrow your search.
    
    
73. How much money do I need to buy a business?
    It depends on the type and size of the business. Most buyers put down 10–30% of the purchase price and finance the rest through loans or seller financing. Businesses under $1M are typically more accessible with SBA loans and flexible terms.
    
    
74. Can I buy a business with no experience?
    Yes — many buyers do! Focus on finding a business with a strong team or systems in place. Relevant management or industry experience helps, but many lenders and sellers will consider your background and willingness to learn.
    
    
75. What should I look for in a business?
    Look for clean financials, recurring revenue, low owner dependency, a loyal customer base, and documented systems. Also consider how well the business fits your skills, goals, and lifestyle.
    
    
76. How do I know if the price is fair?
    To evaluate if a business is priced fairly, start by using valuation tools like SMB.co’s Bestimate, which provides a free, data-backed estimate based on your industry, revenue, and cash flow.
    
    It’s also smart to compare recent sales of similar businesses (comps) - looking at factors like size, industry, location, and profitability. Most small businesses are priced using a multiple of cash flow or EBITDA, so reviewing comparable deals can help you assess whether the asking price aligns with market norms. Need help? SMB.co offers comps and valuation insights to help buyers and sellers make informed decisions.

77. Do I need a lawyer to buy a business?
    It’s highly recommended. A business attorney can help you review the purchase agreement, protect your interests, and ensure a smooth closing. You can use the SMB.co partner network to find the right lawyer for you.
    
    
78. What is the process to buy a business?
    Start by narrowing your search and reaching out to sellers. Once you find a fit, sign an NDA, review the business’s financials, and make an offer (LOI). Then, go through due diligence, finalize the purchase agreement, and close the deal. Find out more about the process of buying and selling a business in this blog post.
    
    
79. How long does it take to buy a business?
    It can take anywhere from 30 days to several months depending on financing, due diligence, and the complexity of the deal.
    
    
80. What are common risks when buying a business?
    Undisclosed liabilities, inaccurate financials, customer concentration, or businesses that rely too much on the current owner. Due diligence helps uncover these risks before you commit.

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