GUIDE TO SELLING A COMPANY
How to Sell a Company: A Guide from M&A Advisors
Selling a company is often the largest financial decision a founder will make, and most make it only once. This guide walks through each stage of a sell-side process, from valuation and preparation through buyer outreach, letters of intent, due diligence, and closing, so you know what to expect before you go to market.
Written by Carson Bomar and Matt Perkins, Co-Founders and M&A Advisors at Exit Game Plan
IN THIS GUIDE
What an M&A Advisor Does · When to Bring an Advisor In · How Buyers Value a Company · The Process of Selling a Company · Selling Without an Advisor · Frequently Asked Questions
THE ADVISOR'S ROLE
What an M&A Advisor Does
For most founders, selling their company is a one-time event. The buyers across the table are often private equity groups, strategic acquirers, and search funds that close deals every year. A sell-side M&A advisor represents the seller in that process. The advisor prepares the company for market, finds and qualifies buyers, runs the negotiation, and keeps the transaction on track through due diligence and closing.
A well-run sale process creates competition among qualified buyers and protects the seller's negotiating position from the first conversation to the closing table.
A sell-side advisor typically handles:
Valuation and pricing strategy
The confidential information memorandum (CIM) and marketing materials
Identifying and screening qualified buyers
Confidentiality and NDA management
Negotiating price, structure, and terms
Coordinating due diligence
Managing the transaction through closing
At Exit Game Plan, Carson Bomar and Matt Perkins advise founders and CEOs nationwide from first valuation through closing. Meet the full advisory team.
When to Bring an Advisor In
Many sellers begin exploring a sale 12 to 36 months before they plan to exit. That runway matters. Issues that surface for the first time in due diligence tend to lower the price or delay the close, while issues addressed early can be fixed or explained on your terms.
Starting early gives you time to:
Clean up financial reporting and normalize earnings
Address operational gaps a buyer will flag
Strengthen the value drivers buyers pay a premium for
Organize documents ahead of due diligence
Build a buyer target list and a go-to-market plan
Much of a company's sale value is protected or lost in the preparation period, long before the first buyer reads the CIM.
If an exit is one to three years out, a confidential conversation with an advisor now can shape the decisions you make in the meantime.
VALUATION
How Buyers Value a Company
Valuation sets the expectations for everything that follows. The method depends on the size of the company, its industry, and the type of buyer most likely to acquire it. Most valuations draw on some combination of three approaches.
Seller's Discretionary Earnings (SDE)
For smaller and lower middle market companies, value often starts with SDE, the total financial benefit a single owner-operator receives from the business. Buyers apply a multiple to SDE that moves with industry, growth, customer concentration, and how dependent the company is on its owner.
EBITDA Multiples
Larger companies are usually valued on a multiple of normalized EBITDA, meaning earnings before interest, taxes, depreciation, and amortization, adjusted for one-time and owner-specific expenses. Private equity groups and strategic acquirers rely on EBITDA as their primary yardstick.
Comparable Transactions
Recent sales of similar companies show how buyers are pricing a sector right now. Our transaction history of 200+ closed deals gives us real data points across industries and deal sizes.
Exit Game Plan combines financial analysis, comparable transactions, and an understanding of how each type of buyer underwrites a deal to set a realistic valuation range. For a deeper look, read How to Value a Business for a Successful Sale and Enterprise Value Explained.
THE PROCESS
The Process of Selling a Company, Step by Step
A sell-side process is built to protect confidentiality while bringing enough qualified buyers to the table to create real competition. Here is how a typical engagement moves from first conversation to close.
01 Valuation and Exit Planning
The engagement starts with a realistic valuation range and a plan for presenting the company. That includes normalizing the financials, identifying the value drivers buyers will focus on, and deciding how to position the company in the market.
03 Buyer Screening and NDAs
Before any buyer sees detailed financials, they sign a non-disclosure agreement and provide background on their capacity to close. Only buyers who clear that screen move forward.
05 Due Diligence
Once an LOI is signed, the buyer reviews financial records, contracts, customers, operations, and legal documents in detail. The preparation done earlier is what keeps this stage on schedule. Read our seller's guide to due diligence.
02 Confidential Marketing and Buyer Outreach
The advisor prepares a confidential information memorandum (CIM) and a blind teaser that describes the opportunity without naming the company. Outreach targets the strategic acquirers, private equity groups, and qualified individual buyers best suited to the deal.
04 Offers and Letters of Intent
Interested buyers submit letters of intent (LOIs) that set out price, structure, and key terms. Comparing LOIs side by side, and negotiating them before signing, protects value at the stage where many deals quietly weaken. Read our seller's guide to the letter of intent.
06 Closing and Transition
With diligence complete and financing in place, the parties sign the definitive purchase agreement, funds transfer, and ownership changes hands. Learn how an asset purchase agreement works and what happens when ownership transfers after closing.
Further reading: 8 questions every buyer will ask, and the tax implications of selling a company.
REPRESENTATION
The Risks of Selling a Company Without an Advisor
Some founders consider selling on their own, often to a buyer who approached them directly. Without representation, the same problems come up again and again:
Pricing the company without current market data
Spending months with a buyer who cannot finance the deal
Sharing sensitive information before a buyer is qualified
Negotiating against a single buyer with no competing offers
Agreeing to LOI terms that cost money at closing
Arriving at due diligence unprepared
Competition among qualified buyers is one of the strongest levers a seller has on price and terms, and it rarely happens without a structured process.
Browse our transaction history to see the range of companies and industries behind our 200+ closed deals.
FAQ
Frequently Asked Questions About Selling a Company
How long does it take to sell a company?
Timelines vary with the size of the company, how prepared it is, and the buyer pool. Many sell-side engagements run several months to a year from going to market to closing, and preparation can start one to three years before that.
How is a company valued for sale?
Smaller companies are often valued on a multiple of seller's discretionary earnings (SDE). Larger companies are usually valued on a multiple of adjusted EBITDA. Comparable transactions in the same industry help set where in the range a company falls.
What is a letter of intent when selling a company?
A letter of intent (LOI) is a buyer's written proposal of price, deal structure, and key terms. Most of its terms are non-binding, though provisions such as exclusivity and confidentiality usually are. Because the LOI frames due diligence and the purchase agreement, its terms deserve careful negotiation before you sign.
How do you keep the sale of a company confidential?
Buyers first see a blind teaser that does not name the company. Detailed information is released only after a buyer signs a non-disclosure agreement and is screened for their ability to close.
When should I talk to an M&A advisor?
Ideally one to three years before you plan to sell. That leaves time to improve financial reporting, address issues a buyer would flag, and build value before going to market. A first conversation carries no obligation.
NEXT STEP
Talk With an M&A Advisor About Your Exit
Carson Bomar and Matt Perkins are available for a confidential, no-obligation conversation about what your company may be worth and what a successful sale could look like.
