By: John P. Napolitano, CFP®, CPA, PFS, MST

Selling a business isn’t like selling a used car or a home. Selling a business entails advanced planning and an element of getting your house in order for that business to be presented in the best light possible.

The best time to begin this process is at least five years before you foresee your exit. I feel the best place to start is with your current valuation. What is the business worth in the eyes of qualified buyers? For many, the valuation process will shine a light on what your business is currently worth and what you may need to do in order to increase its value and appeal in the marketplace. This also provides a chance to see how a sale at the current valuation fits into your overall financial plan and how much you need to get from the business in order to retire or move on to something else.

Ensure your books and records are in good order. A buyer wants to see more than a profit and loss statement and a balance sheet. They’ll want details about the number of customers, the average sale per customer, the longevity of your customers, employee rosters with personnel files showing the employees history and many other details that you may know off the top of your head. But a buyer will need the proof or documentation of these and many other items.

Part of the advanced planning would include a comprehensive review of any legal documents in place.  This may include shareholder agreements for those with partners, salary or compensation agreements for key people, leases, and contracts for services or goods. Having agreements in writing and in place for many years will send a confident message to potential buyers that you’ve attended to important details.

Put a plan in place with your key employees. Longevity of key people is another confidence builder for buyers. They want to see that employees like the company and enjoy their experience working at the company. The plans may include compensation agreements articulating any bonus structures and further details that weave into your succession plan. 

Just because you plan to sell in five years doesn’t mean that you’ll be healthy for the whole time too. Your contracts with key people should clearly outline who’s in charge if you aren’t and what type of added rewards may be offered to those who are asked to step up in your short or permanent absence.

Depending on the value of your business, you may also consider sharing some of the harvest from a sale with these key people. Your key employees have already wondered what happens to them if you sell the business. Help them feel comfortable and create a plan that can incent them to stay aboard for the next five years, and possibly beyond. Buyers often need your staff to carry out the day to day activities that shaped this sale in the first place. In some situations, a sale can create opportunity for your most key people to continue with a more responsible role.


John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.   1-05017924 (6/12/20)