The ABCs of Going to Market: A Business Owner’s Guide to Selling a Business
- Katie Busch
- 1 day ago
- 5 min read
You're ready to sell your business.
And suddenly, everyone around the table seems to be speaking a different language.
NDA. CIM. IOI. LOI. QoE. Due Diligence. Purchase Agreements.
If you're thinking, I thought I was selling a business, not studying for a test, you're not alone. You spent years building and running a successful business. Now you're expected to understand an entirely new vocabulary for selling it.
So, let's simplify it. Here are the ABCs (or at least the CIMs, IOIs and LOIs) of taking a privately held business to market.
A: Actually Get the Business Ready
Before you start talking to buyers, there's an important question to answer: Is the business ready to be sold?
What to Consider Before Selling a Business
Buyers will want to understand several key areas of the company:
Financials: Do you have at least 3 years of accurate and consistent financial reporting?
Owner Dependence: Does the business have a strong leadership team beyond the owner?
Customers: Is revenue diversified, or does the business rely heavily on a handful of customers?
Operations: Are the company's processes documented and transferable?
Growth Opportunities: Can a buyer clearly see where future growth could come from?
Risks: Are there issues that could create concerns during the sale process?
A business that's highly dependent on its owner, has messy financials, or relies heavily on a handful of customers may still sell. But those issues can affect business value, deal structure and buyer interest.
This is why exit planning and transaction planning aren't the same thing.
The work you do before going to market can have a significant impact on what happens once you do.
B: Build the Story - The CIM
Once you're ready to go to market, your advisor will typically develop a Confidential Information Memorandum, or CIM.
Think of the CIM as the story of your business, but with a lot more financial data.
It usually includes company history, products and services, customers and markets, financial performance, operations, leadership, growth opportunities and other information a potential buyer needs to understand the business.
The goal isn't just to describe what the company is today. A strong CIM helps a buyer understand why the business is valuable and where it can go next.
C: Cue the Buyers
Now it's time to identify and approach potential buyers.
Depending on the business, that might include strategic buyers (other companies that see value in your customers, capabilities, geography or team), or financial buyers such as private equity firms.
Before sharing detailed information about your company, you will typically ask prospective buyers to sign a Non-Disclosure Agreement, or NDA. The NDA helps protect the confidential information they'll receive about your business, including the CIM.
Once the NDA is in place, interested buyers can review the available information and may submit an IOI, or an Indication of Interest.
An IOI is essentially a buyer raising their hand and saying, "We're interested, and here's roughly what we might be willing to do."
It isn't a final offer. Think of it more like progressing from a first date to, "Yes, I'd like to see you again."
D: Define the Deal - The LOI
As discussions progress, serious buyers may submit a Letter of Intent, or LOI.
Now we're getting somewhere.
The LOI outlines the major proposed deal terms: purchase price, deal structure, financing, working capital expectations, timing, exclusivity and other important conditions.
It's still not the final purchase agreement, but it's a meaningful milestone. Once an LOI is signed, the buyer is typically given an exclusive period to dig deeper into the business.
Which brings us to everyone's favorite part…
E: Examine Everything - Due Diligence
Due diligence is where the buyer works to verify that what they've learned about the business is accurate.
And when we say everything, we mean…pretty much everything.
Financial statements. Tax returns. Customer contracts. Employee information. Legal matters. Insurance. Technology. Equipment. Intellectual property. Environmental issues. Vendor agreements, etc.
Often, this includes a Quality of Earnings (QoE) review to take a deeper look at the company's financial performance and determine how accurately reported earnings reflect the ongoing economics of the business.
This phase can feel invasive and exhausting. Good preparation makes an enormous difference.
F: Finish the Deal - Close
Assuming diligence goes well, attorneys and advisors work through the final purchase agreement and remaining deal terms.
Documents get signed. Money moves. Congratulations! You sold your business!
And then you ride off into the sunset.
Well…maybe.
G: Get Ready for What Comes Next
Post-close can look very different depending on the deal.
Some owners walk away relatively quickly. Others stay for a transition period. Some retain equity or continue in a leadership role. Employees may need communication and reassurance. Customers and vendors may need introductions.
And the owner faces something equally important: What's next for me?
After spending decades building a business, that question deserves just as much thought as the transaction itself.
The go-to-market process can sound complicated, and to be fair, parts of it are.
But you don't need to become an expert in every acronym. You need to understand the process, surround yourself with the right advisors, and most importantly, start preparing before you're ready to sell.
Because when it comes to selling your business, the best time to learn your ABCs isn't the night before the test.
Selling a Business: Common Questions
What should I fix before I put my business up for sale?
Before putting your business up for sale, focus on issues that could affect its value, buyer interest or deal terms. Common areas include owner dependence, inconsistent financial reporting, customer concentration, undocumented processes and a weak management team.
The goal isn't to make the business perfect. It's to make it easier for a buyer to understand, operate and transition.
How far in advance should I start preparing to sell my business?
Ideally, you should start preparing to sell your business well before you plan to go to market. Some improvements, such as strengthening the management team, reducing owner dependence or diversifying customers, can take years to show meaningful results.
Even if you're already considering a sale, starting now can help you identify issues early and give you more options before approaching buyers.
What will buyers look at during due diligence?
During due diligence, buyers may review financial, legal, operational and commercial aspects of the business. This can include tax returns, customer and vendor contracts, employee information, legal matters, insurance, technology, equipment, intellectual property and other business records.
The more organized and consistent your records are, the easier the process tends to be. Preparing these materials early can also uncover problems while you still have time to address them.
How do buyers determine the value of a business?
Buyers determine business value by considering factors such as earnings, cash flow, comparable transactions, growth opportunities, assets and business risks. There isn't one formula that applies to every company.
Importantly, buyers aren't just looking at what the business earns today. They're also evaluating how sustainable those earnings are and what could affect future performance.
Katie Busch, Value Advisor, draws on deep experience in executive leadership, operations, and human resources. With firsthand insight into fast-paced growth across multiple industries, she helps business owners identify opportunities that strengthen value, improve profitability, and free up time for what matters most.
Journey Consulting is focused on providing business owners and their businesses with strategic planning, exit planning, financial expertise, and organizational improvement. We use a holistic approach within all of our services by aligning leadership with business strategy and outcomes.
