39 Questions to Ask When Selling a Business

There’s no way around it: There are a lot of questions to ask when selling a business. Selling your business will likely be the largest financial transaction – and one of the biggest emotional decisions – of your life. The more deliberate you can be about your thinking, your reasoning, and your path forward, the better the outcome and the happier you’ll be with your decision to sell. 

We’ve broken the questions to ask when selling a business into several categories, with heavy emphasis on the most important one: The questions you, the business owner, ask yourself.

Questions to Ask Yourself When Selling Your Business

As far as questions to ask when selling a business, you’ll want to look in the mirror first. Here are several questions to get your wheels turning, along with some quick tips.

1. What is your motivation for selling the business?

This is one of the first questions potential buyers will ask you, and it’s the first question to ask yourself when selling your business. Your primary motivation for selling will determine much of what comes next. As such, you’ll want to do some serious soul-searching. 

Quick answers like “I’m tired,” or “I don’t want to deal with another headache,” or “I want more free time” all merit further analysis. Is selling the business really the answer? 

  • If you’re tired, maybe you just need an extended vacation or mini-sabbatical. 
  • If you have too many headaches to deal with, maybe you need to hire some key positions, or find an outsourced solution. 
  • If you want more free time, maybe it’s time to build a senior management team and delegate your daily responsibilities to them.

The point here is that sometimes selling the business seems like a good way to avoid having to fix what’s bothering you about your small business. But problem-avoidance is not a good reason to sell.

Make sure selling the business is something you really want to do (read on for more clarity around that). The sale of a business goes well when you’re in the mindset of looking forward to, not getting away from.

TIP: Make sure you’re selling for the right reasons by asking The Three Whys

2. Is now a good time to sell the business for you personally?

After getting clear on your primary motivation, you’ll want to start with three big questions to ask when selling a business. The first is to ask yourself whether or not you are emotionally and financially ready to sell your business.

Signs that you’re emotionally ready include not feeling the need to be in control anymore. You find yourself thinking about other ways to spend your time and use your talents. You’re not filled with existential dread at the mere thought of not owning your business. In short, moving on sounds appealing.

In addition to emotional readiness, are you financially ready to sell your business? Many business owners build a lifestyle that is supported by various forms of compensation from their business. Will the sale proceeds, in addition to your savings, investments and income outside the business be enough to support your post-sale life?

TIP: Try to imagine what your life would be like without owning your business. Don’t put this exercise off just because you don’t feel ready today. It can be difficult to sell your small business after you’ve hit serious burnout and wish you’d sold yesterday.

3. Is the business ready to sell?

The second big question to ask when selling a business is whether or not this is a good time for the business to be sold. 

  • Is your business coming off three to five years of consistent financial performance, or steady growth?
  • Are your processes and financial statements run like a well-oiled machine?
  • Is your small business poised for a new owner with more resources – like capital, people, and operational know-how – to take the business to the next level? 

These are all good times to sell a business. 

The irony is that the perfect time for the business to be sold is often the time when selling is the last thing on a business owner’s mind. “Why would I sell now? Things are great!” This is precisely when you want to sell, not when things are stagnant, or worse – on the decline.

TIP: Our CPA advisor here at Allan Taylor & Co. has a favorite saying: “I can’t tell you when it’s the right time to sell your business, but I can definitely tell you when it’s the wrong time.”

4. Is the market good for selling a business?

Alarm clock and sign that reads, Are you ready?

The third big question to ask when selling a business is whether or not the market conditions are favorable. 

Is M&A activity currently hot in your industry? Is your business in a geographic location where larger competitors are trying to get a foothold? Are interest rates low, making it easier for prospective buyers to get bank financing (SBA or conventional)?

In general, there is always a market for great small businesses: There are typically more qualified buyers than there are fantastic businesses for sale at any given time.

However, you’ll definitely have the wind at your back if you sell your business when overall economic conditions are good, buyers are focused on your industry, and there’s easy access to capital.

5. Do you know what your business is worth?

The majority of business owners have never gotten a professional business valuation. Yet those same owners often have a certain number in mind. We sometimes refer to this as the business owner’s “magic number.” In the parlance of business valuation and exit planning, it’s referred to as the business owner’s “destination value.” 

Whatever you call it, this is another question to ask when selling your business: Is there a specific sales price you’re tied to, whether it’s justified or not? 

Be honest with yourself (and your advisors) if there’s a sales price you want to achieve. This number isn’t going to appear out of thin air. There may be a lot of work to do in order for your business to support your destination value.

Regardless of whether you have a specific number in mind, get a business valuation immediately. You may find that the market value of the business is not what you want or need, creating what is called a valuation gap. Understanding what buyers will pay for your business sooner rather than later gives you time to close any valuation gap, or discuss ways to address it with a business broker or M&A advisor.

A business valuation will also uncover all of the characteristics in your business that drive value, as well as the ones that detract from it. Regardless of when you sell, this is critical information to have about your business. It can guide the way you manage the business in the years leading up to a sale, increase value in the interim, and maximize the eventual sales price.

TIP: Get a business valuation from a certified appraiser, business broker, or M&A advisor sooner rather than later. “I wish I hadn’t gotten my business valued so early in the process,” said no business owner … ever.

6. How much longer do you want to run the business?

This is a good thing to keep in mind, regardless of your timeframe for selling. Running a business can seem daunting when there’s no end in sight. Thinking about your exit can relieve some of the pressure. It can also help inform personal and business goal setting.

As mentioned above, it’s best to avoid selling the business after you’ve reached burnout. It takes a lot of extra time and energy to get through the sale process – a complex task you’ll have to deal with while still running your business. And you’ll typically need to stay on with the new owner to ensure a smooth transition (anticipate at least six months).

TIP: Don’t let yourself get to the point of burnout before you start thinking about selling. By then it might be too late to get your business ready for a sale, work to close a valuation gap, and get through the rigorous sales process.

7. Is selling the right exit strategy for you?

There are two main ways to transition a business: Internally or externally. Have you explored all possible exit strategies and decided that selling to an outside buyer is your preferred choice?

Some business owners would like to sell or give the business to the next generation. Others might want to reward key employees by facilitating a management buyout, or installing an Employee Stock Ownership Plan (ESOP).

If you’re conflicted about what exit strategy is best for you, talk to an advisor trained in exit planning who can give you unbiased advice. However you decide to exit your business, you’ll want to be confident that you’ve explored your options and made the right choice.

TIP: If an internal sale is plan A, be sure that selling the business to an outside buyer is plan B. Things don’t always work out the way you think they will. Think of a backup plan as insurance.

8. Is selling the right exit strategy for your business?

The best exits happen when there’s a good match between what the business owner wants and what the business can support.

An ESOP is a good example of an exit strategy that an owner may want, but is not feasible given the characteristics of the business.

Likewise, there’s often an emotional pull to sell or give the business to the next generation. But are they really the best choice for leading the business into the future? Would your business be more successful if it were acquired by a strategic buyer or private equity group (PEG) with deep expertise in your industry?

TIP: Ask an advisor for an unbiased opinion about the most likely exit strategies for your business. If selling to an outside buyer is the best choice, then be confident in your decision and start planning.

9. What are your main goals around selling the business?

Unlike motivators – such as being able to travel and spend more time with family – goals are specifically financial, personal, or operational. Examples of goals for a sale may include:

  • I want/need $X million after fees and taxes.
  • I’m willing to stay for six months with a new owner to help with a smooth transition.
  • I want a potential buyer to purchase the real estate.
  • I want to reward employees.

Get clarity around the top two to five things that you really want to happen from a sale. This will help guide the process, from positioning the business for sale to discussing offers with potential buyers. 

10. Are there any “deal breakers” that would prevent you from selling?

This is the inverse of the question above. Is there a “deal breaker” that would be non-negotiable in a sale scenario? Examples of potential deal-breakers could include:

  • A potential buyer wanting to relocate the business.
  • A potential buyer who wants your customer list, but not your employees.
  • Accepting an equity rollover.
  • Accepting a performance-based earnout.

TIP: Talk to a business broker or M&A advisor about deal structure and things that could come up in a sale scenario. Get clarity on what would be acceptable, and what would not.

11. Who will help you with the process of selling your business?

Most business owners only get one opportunity to sell a business. In addition, most business owners have limited (if any) knowledge of what it takes to actually get a business sold.

Selling your business is not a DIY endeavor. You’ll want to hire a team of professionals to help you with the sale process. At a minimum, your deal team should consist of:

  • Business broker or M&A advisor
  • CPA with experience in selling small businesses
  • Attorney who specializes in M&A and Corporate Transactions
  • Financial planner 

As the business owner, the buck stops with you. You’ll want to start by focusing on the questions above before selling your business. With that said, here are some other categories to consider.

Questions to Ask a Business Broker or M&A Advisor

  1. How long will it take to sell my business?
  2. Who are the potential buyers for my business?
  3. What would a deal structure look like for selling my business?
  4. Do my financial statements look ready for buyers and due diligence?
  5. What would you recommend I do to prepare my business for a sale?
  6. What is the market value of my business?
  7. What will drive/detract from the value of my business?
  8. What is your process for finding buyers and marketing a business for sale?
  9. Can I see a copy of your business broker’s contract?
  10. What are your fees?

Questions to Ask Your CPA

  1. What will I pay in taxes when I sell the business?* 
  2. Can you help me prepare my financial statements for the due diligence process?
  3. Will you be able to respond to due diligence requests in a timely manner?
  4. Have you helped other clients with the sale of their business?
  5. Can you refer me to a reputable business broker or M&A advisor?

*NOTE: There is only one right answer to this very important question. You cannot calculate the tax consequences of the sale of your business until you have a deal in front of you. With that said, there is still plenty to discuss with your CPA. An experienced business broker or M&A advisor can help you direct this conversation with your CPA, as well.

Questions to Ask Your Attorney

  1. Are all of the contracts associated with my business assignable?
  2. Is there any legal reason that would make it hard to sell my business?
  3. Is there any legal due diligence we should do before selling (e.g. review filings with the United States Patent and Trademark Office if selling intellectual property assets)?
  4. Are M&A and Corporate Transactions in your area of expertise?
  5. Can you refer me to a reputable business broker or M&A advisor?

Questions to Ask Your Financial Advisor

  1. How will the business sale proceeds fit into my retirement plan?
  2. Do I need a certain amount of net proceeds – after fees and taxes – in order to sell?
  3. How will you help me manage my new liquidity post-sale?

Questions to Ask Friends & Family

  1. What concerns do you have about me selling the business?
  2. Are you ready to support me in this decision?

Question to Ask Partners & Key Employees

  1. What concerns do you have about me selling the business?
  2. How would you feel about working with a new owner?
  3. Will you support me if I need help at any point in this process?

The thought of selling your business can quickly become overwhelming. Don’t worry. We know there are lots of important questions to ask when selling a business. The advisors at Allan Taylor & Co. are ready to help you find the answers.

Barbara Taylor is the co-founder of Allan Taylor & Co. You can connect with her on Twitter @ballantaylor and LinkedIn.

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