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Small Business Hub: A Research Guide for Entrepreneurs

Selling

Options for selling your business include transferring ownership to a family member or colleague, or can involve a third party. A large part of selling is figuring the value of your company, which can sometimes be difficult to do as the owner and creator. Valuing your own company gives context for any offers you receive, and provides support to strengthen your negotiations. There's no one magic formula; instead there are number of different valuation methodologies to use. The goal is to find a fair market value, which is the amount that a willing buyer and a willing seller would agree to in an open market with knowledge of all the facts. When preparing to sell, gather financial, legal, marketing, and operations information.

Keep Your Business in the Family

A family-owned business is any business with two or more members have majority ownership or control. Intergenerational transfer is when your children or other relatives take ownership. Having a succession plan can make a transition smoother and avoid future conflicts and tension. If your reason for selling your business is to make a profit, note that you may get less for your business than in a competitive sale, and your family member may not be able to get the financing to pay the fair market price upfront. 

Sell Your Business to Managers and/or Employees

Management buyout (MBO) is when one employee or a group of employees assume ownership. Similarly to family transfers, an internal ownership transfer can create complications in terms of valuing the business, finding the right person to take over, and managing expectations. Another option is employee share/stock ownership plans (ESOPs), which allows employees to vest in the business and can vary as to the type of stocks and amount of control they have as shareholders. 

Sell Your Business

Finding a prospective buyer may involve reaching out to industry contacts, such as trade associations or suppliers. Another option is to hire a business broker, who can facilitate all parts of the sale, but make sure to fully research a broker before agreeing to pay for their services. 

Select Resources

The following materials link to fuller bibliographic information in the Library of Congress Online Catalog. Links to additional online content are provided when available.

These are freely available online sources provided by government agencies, trade publications, and organizations.