Selling a business is one of the biggest financial decisions most owners ever make, and many only do it once. Here is how the process usually works for Bay Area owners, from the first valuation to the day the keys change hands.
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1. Start with a realistic valuation
Most small businesses are priced on a multiple of seller's discretionary earnings (SDE): net profit plus the owner's salary, benefits and one-time or non-cash expenses. Larger companies are usually valued on EBITDA. The multiple depends on your industry, how dependent the business is on you, the length of your lease, customer concentration and growth trends.
A broker opinion of value built from your last three years of tax returns and profit-and-loss statements gives you a defensible asking price, and a sense of what you could do in the next 6–12 months to raise it.
2. Get your books and documents buyer-ready
- Three years of tax returns and P&Ls, plus year-to-date numbers
- A list of equipment, inventory and other assets included in the sale
- Your lease, with any assignment or renewal options
- Key contracts, licenses and permits
- An organization chart and summary of staff roles
Clean, reconciled books shorten due diligence and make it easier for a buyer to qualify for an SBA loan.
3. Protect confidentiality
Word that a business is for sale can unsettle employees, customers and suppliers. A broker markets the business without naming it, and releases details only to qualified buyers who sign a non-disclosure agreement.
4. Understand how the buyer will pay
Many acquisitions under $5 million are financed with an SBA 7(a) loan, often combined with a buyer down payment and sometimes a seller note. Knowing the lender's requirements early helps you structure a deal that actually closes.
5. Plan for California-specific steps
6. Negotiate, open escrow and close
Once you accept a letter of intent, the buyer completes due diligence, the lender underwrites the loan, the landlord approves the lease assignment and escrow handles the closing. A typical timeline is three to six months from listing to close, depending on financing.
Why work with a business broker?
A broker prices the business, screens buyers, manages confidentiality and keeps the lender, landlord, escrow and attorneys moving. At BRG, our business brokerage, commercial real estate and commercial loan specialists work together, so if your sale includes the building or the buyer needs financing, it's handled under one roof.
Our team at BRG Realty works with Bay Area business owners, buyers and investors. A first conversation is confidential and free.