How to Sell a Business: A 120-Day Timeline that Works
If you’re looking for a practical, structured plan, this guide lays out a how to sell a business timeline you can execute in 120 days—from valuation and preparation to LOI, diligence, and closing. To move now, start with BizTrader’s seller workflow here: Sell a Business on BizTrader.
Who this is for: owners planning a sale within 3–6 months who want a concise, repeatable process that keeps momentum and maximizes value.
120 Days at a Glance
- Days 1–7: Decide & Align — objectives, team, valuation approach (SDE/EBITDA), prep checklist.
- Days 8–21: Prepare to Market — recast financials, light QoE, materials (teaser/CIM), data room.
- Days 22–30: Price & Launch Plan — pricing narrative, buyer profiles, financing readiness.
- Days 31–45: Go to Market — launch, qualify inquiries, NDA workflow, message discipline.
- Days 46–75: Manage Buyers — meetings, Q&A, offers, LOI terms (earnout, escrow, non-compete).
- Days 76–100: Due Diligence — financial/legal/ops, QoE validation, lender and landlord processes, draft APA.
- Days 101–120: Close & Transition — finalize agreements, consents, funds flow, close of escrow, handoff.
How to Sell a Business Timeline: 120 Days, Step by Step
Days 1–7: Decide, Align, and Scope
Set the brief. Clarify your outcome: full exit vs. partial, asset vs. stock sale, desired role post-close, target timing, and minimum acceptable terms. Decide the valuation lens for your size/industry: SDE (Seller’s Discretionary Earnings) for many main street deals; EBITDA for larger lower-middle-market deals.
Assemble your A–team. At minimum: M&A broker/advisor, transaction attorney, and tax CPA. If you need a vetted professional fast, use BizTrader’s directory: Find a Pro (Brokers, Attorneys, CPAs).
Scope your “day-zero” risks. Customer concentration, undocumented IP, expiring key contracts, licensing gaps, uncollected sales tax, off-the-books add-backs, or commingled expenses. List each risk and assign an owner and fix-by date.
Create your prep checklist. Last three years of financials and tax returns; TTM P&L and cash flow; AR/AP agings; payroll registers; key contracts; licenses/permits; corporate minute book; equipment list; inventory policy; website analytics; org chart; policy manuals; any prior valuations.
Days 8–21: Prepare to Market
Recast and normalize. Identify add-backs and one-time/non-operating items to arrive at realistic SDE/EBITDA. Document each add-back with an invoice, payroll record, or contract note. Define a working capital peg conceptually (what level of AR + inventory – AP the business needs to operate) for later negotiation.
Light QoE (Quality of Earnings). You don’t need a 100-page report to catch obvious issues. Run simple analytics: revenue mix and trend (TTM); gross margin by product/service; customer concentration; seasonality; churn/retention; cash vs. accrual impacts. The goal is defensibility.
Build the materials.
- Blind teaser (no name, high-level highlights, compelling hook).
- CIM (Confidential Information Memorandum): business model, markets, operations, team, financials (historical and TTM), growth levers, key risks with mitigations, and a clear “why now.”
- Data room: organize folders, apply consistent naming, use view-only access where appropriate, and keep a changelog.
Draft the legal scaffolding. NDA template, management meeting agenda, diligence request list, LOI template with key levers: purchase price, structure (asset vs. stock), working capital peg, escrow holdback, earnout (if used), non-compete, exclusivity, timeline.
Days 22–30: Price & Launch Plan
Craft your pricing narrative. Use the recast to anchor value and your growth story to justify it: backlog, pipeline quality, contracts with terms, unit economics, operating leverage, and realistic expansion vectors. Be ready to explain why an asset purchase agreement (APA) may be preferred for small-to-mid deals (tax and liability considerations) while keeping flexibility to evaluate a stock deal if it commands superior terms.
Map buyer profiles. Strategic (adjacent competitors/suppliers), financial (search funds, family offices), and individual owner-operators. Tailor messaging for each—strategics care about synergies; financial buyers care about stability, growth levers, and clean add-backs; operators care about transition and training.
Financing readiness. Many buyers will need debt. Encourage early conversations with lenders and prep a lender-friendly package (clean TTM, tax returns, ownership chart, licenses). Point buyers to resources here: Business Loans on BizTrader.
Days 31–45: Go to Market
Launch plan. Go live with your teaser and begin outreach. Keep confidentiality guardrails: use unique deal email aliases, scrub metadata from documents, and share the CIM only under NDA. Establish a rapid-response rhythm: acknowledge inquiries same day, qualify within 24–48 hours, and schedule intro calls twice weekly.
Qualification standard. Verify buyer identity, relevant experience, liquidity, and DSCR-friendly cash flow expectations (i.e., the business’s free cash flow can service the target debt). Require a simple buyer profile and NDA before releasing the CIM. Track all interactions and next steps in a simple pipeline.
Message discipline. Keep numbers consistent across teaser, CIM, and verbal commentary. If you update figures, document what changed and why. Keep competitive information sequenced—save customer names, pricing, and IP details for post-LOI diligence.
Days 46–60: Manage Buyer Interest
Management meetings & site visits. Use a clear agenda: origin story, unit economics, operations tour, growth opportunities, risks with mitigations, transition plan. Document Q&A and publish answers to the data room to avoid repeating work.
Offer guidance without quoting against yourself. If you receive multiple indications, request formal LOIs on a set date with guidance on structure priorities (e.g., limited earnout, tight working capital peg definition, reasonable escrow, and strong non-compete terms).
Negotiate the LOI terms that matter.
- Price & structure (asset vs. stock) with tax-conscious framing.
- Working capital peg methodology and true-up mechanics.
- Escrow holdback amount and release schedule.
- Earnout guardrails (clear performance definitions you can control).
- Non-compete scope, duration, and geography.
- Exclusivity period and diligence timeline (weeks, not months).
Choose momentum. Select the buyer with the best balance of value, terms, financing certainty, and cultural fit. Sign the LOI and immediately launch diligence.
Days 61–75: Kick Off Diligence & Draft the APA
Financial diligence (expand your QoE). Provide monthly financials, bank statements, tax returns, customer cohort data, and inventory records. Expect tie-outs of SDE/EBITDA, add-backs validation, and working capital seasonality analysis. Maintain a running issues list with proposed resolutions.
Legal diligence. Corporate formation docs, cap table, minutes, pending or threatened claims, compliance items, IP assignments, vendor and customer contracts, privacy/security policies, and licenses. Identify any consents and change-of-control provisions early.
Operational diligence. Org design, key employee agreements/bonuses, training materials, standard operating procedures, equipment maintenance logs, and supplier redundancies.
Draft the purchase agreement. Your counsel should lead on the Asset Purchase Agreement (APA) (or stock purchase agreement, as applicable). Focus on representations and warranties, schedules (assigned contracts, IP, equipment), indemnities, escrow terms, and post-close transition agreements.
Lender and landlord processes. Keep the lender’s checklist moving (quality financials, projections, insurance certificates, environmental or other reports as needed). Engage the landlord early on consent or new lease. If buyer financing is needed, remind them of resources: Explore Business Loans.
Days 76–100: Diligence to “Pencils Down”
Weekly deal cadence. Hold a 30-minute standing call with buyer, counsel, and your broker to clear open items. Track a single, dated issues log with owners and due dates. Push for “pencils down” on diligence by day ~100.
Finalize economics. Reconfirm the working capital peg with fresh month-end data. Resolve inventory valuation methodology. Align on prorations, assumed liabilities, and any price adjustments tied to diligence findings.
Paper the transition. Training and consulting scope, customer introductions, escrow release schedule, earnout measurement mechanics (if any), and communications plan (employees, customers, vendors).
Days 101–115: Closing Prep
Pre-close checklist.
- Finalize APA/SPA and all schedules.
- Board/member approvals; officer certificates; good-standing certs.
- UCC lien and judgment searches; payoff letters and releases.
- Consents: landlord, key vendors, licensors, and any regulatory bodies.
- Transition services agreement; non-compete; employment/bonus agreements as needed.
- Escrow instructions and funds flow.
- Tax allocation statement (e.g., Form 8594 schedules if asset sale; coordinate with CPA).
- Insurance binder updates; benefits/COBRA plan transitions if applicable.
Dry run. Conduct a mock close: verify wire instructions, signatures, and order of operations. Confirm communications timing to employees and customers.
Days 116–120: Close & Handoff
Close of escrow. Execute signatures, confirm funds flow, deliver possession, and distribute communications. Perform an inventory count and working capital snapshot if agreed.
First 30–90 days post-close (set now). Calendar buyer training sessions, key customer/vendor introductions, and weekly check-ins. Monitor earnout metrics (if applicable) and escrow milestones.
Pricing, Structure, and Financing: Keys to Speed and Certainty
Pricing that compels—without giveaways. Your price should be supported by recast financials, defensible add-backs, and a clear growth story. That combination signals quality to both buyers and lenders and accelerates underwriting.
Choose structure intentionally. For many small and mid-sized deals, APAs are common because they can simplify liability allocation and tax treatment. Stock deals can be efficient when licenses/contracts are hard to assign or when tax outcomes justify it. Discuss with your attorney and CPA before you commit in the LOI.
Financing fit. If a buyer uses debt, lenders evaluate sustainability of cash flow—commonly framed as debt service coverage. Position the business with a clean TTM, realistic projections, and evidence of durable margins. Point buyers toward financing resources early via BizTrader: Business Loans.
Risk Controls That Protect Value
Quality of Earnings (QoE) discipline. Even a light QoE that ties to bank statements, tax returns, and revenue recognition rules reduces re-trade risk late in the process.
Data hygiene and version control. Store all documents in a single data room with consistent file names. Avoid email attachments for live documents. Log every update.
Confidentiality by design. Sequence disclosures. Share sensitive customer/pricing data only after LOI and under controlled access. Use NDAs with clear permitted-use language and non-solicit provisions.
Deal rhythm. Inertia kills deals. Use a weekly cadence, an issues log, and defined decision dates. If a task slips, escalate the path to green immediately.
FAQs
Is 120 days realistic for every business?
No timeline fits all. Regulated industries, complex carve-outs, or heavy landlord/regulatory approvals can take longer. The value of this how to sell a business timeline is the operating discipline it imposes: parallel-path workstreams, weekly cadences, and early identification of roadblocks.
Do I really need a broker or M&A advisor?
DIY is possible for smaller transactions, but a seasoned broker can expand buyer reach, maintain confidentiality, and keep the process on schedule while you run the company. If you want options, browse BizTrader’s network: Find a Pro.
What’s the difference between SDE and EBITDA?
SDE adds back a single owner’s compensation and discretionary items to reflect owner-operated cash flow, often used for smaller businesses. EBITDA excludes interest, taxes, depreciation, and amortization and is common for larger or investor-backed deals. Your recast should make either clear and defensible.
Asset vs. stock sale—how should I choose?
Each has trade-offs in taxes, liabilities, assignability of contracts/licenses, and speed. Many small-to-mid transactions close as asset sales via an APA, but choose based on your industry realities and advisor guidance.
How do I keep buyers moving without losing leverage?
Set deadlines, publish a diligence checklist, maintain a single issues log, and require a weekly cadence. Offer access for progress, not promises. The how to sell a business timeline works because it structures decisions and keeps the deal team accountable.
Implementation Checklist
Use this condensed list to track progress across the timeline:
- Valuation & Story — Recast SDE/EBITDA; define growth narrative; identify risks/mitigations.
- Materials — Teaser; CIM; data room; LOI/APA templates; NDA; diligence list.
- Market — Launch on marketplace; target buyer outreach; NDA/CIM workflow; pipeline tracking.
- Offers — Standardize LOI terms; compare structure, peg, escrow, earnout, non-compete, timeline.
- Diligence — Financial (QoE), legal, operations, HR, IP, licenses; landlord and lender processes.
- Closing — APA/SPA finalized; consents; payoff letters; funds flow; transition plan.
Next Steps
- List your company and tap active buyers: Start Your Sale on BizTrader.
- Need expert support? Browse vetted brokers, attorneys, and CPAs: Find a Pro.
- Want a deeper primer? Read our seller/buyer fundamentals: Guide to Buying & Selling Businesses.
Key Terms Reference
- SDE: Seller’s Discretionary Earnings (owner-operator cash flow with add-backs).
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization.
- QoE: Quality of Earnings analysis validating revenue, margins, and add-backs.
- LOI: Letter of Intent outlining price, structure, exclusivity, and timeline.
- APA: Asset Purchase Agreement defining the asset sale terms and schedules.
- DSCR: Debt Service Coverage Ratio; whether cash flow can cover debt payments.
- Working Capital Peg: Target level of net working capital delivered at close.
- Escrow Holdback: Funds held post-close for indemnities or adjustments.
- Earnout: Contingent consideration based on post-close performance.
Disclaimer: This article is for educational purposes only and does not constitute legal, tax, or investment advice. Always consult a qualified broker, attorney, and CPA regarding your specific situation.
