How to Sell a Business: The Owner's Guide From Decision to Close

You sell a business in four stages: preparation, confidential marketing, a letter of intent with diligence, and closing. Munera's published timeline puts preparation at 4 to 8 weeks, marketing at 2 to 4 months, and the span from your decision to a signed LOI at 3 to 6 months. LOI to close runs 60 to 90 days, and that stretch depends on the buyer's financing and diligence.

Stage 1: Preparation

You build the financial picture a buyer will test. That means clean statements for the last fiscal year and the year before, and a list of add-backs you can document. Seller discretionary earnings are net profit plus one owner's full compensation plus documented add-backs. A buyer who needs a manager to replace you will subtract a market-rate salary and look at EBITDA instead. Know both numbers before anyone asks. Our page on add-backs a buyer will accept covers which ones survive.

Stage 2: Confidential marketing

Munera does not list a business publicly. The business is shared only with buyers who have signed an NDA and been vetted for capital and fit, and the first look is a blind profile that does not name you. Your employees, customers, and competitors learn nothing until a buyer has qualified. If your business matches one of Munera's active buyer clients, a matched introduction can produce an offer within weeks.

Stage 3: LOI and diligence

The LOI sets price, structure, and exclusivity. Diligence then tests every claim in your financials. Buyers check tax returns against the profit and loss statement, bank deposits against revenue, and customer concentration against your story.

Stage 4: Closing

Lawyers draft the purchase agreement, the lender finalizes the loan, and funds move at the settlement. You should plan your transition commitments and your tax structure before the LOI, not after, because both are far harder to change once the buyer has exclusivity.

Five SBA thresholds decide whether a buyer using a 7(a) loan can close on your price. They come from SOP 50 10 8.1, which applies to loans numbered on or after October 1, 2026.

Three points matter most to you as the seller.

• The valuation caps the debt. Total acquisition debt, meaning the SBA loan plus any seller debt not on full standby, cannot exceed the lender's valuation. If the appraisal comes in below your price, the gap must be covered by buyer equity or by debt on full standby.
• Your standby note stays out of the coverage test. Seller debt on full standby is excluded from debt service. An interest-only seller note that is not on standby is amortized over no more than 10 years for the test.
• The rate is capped. WSJ prime is 7.00% as of September 17, 2026, and for loans above $350,000 the variable maximum is prime plus 3.0%, or 10% at today's prime. That cap limits what a buyer's payment can be.

A buyer will run your numbers through our SBA 7(a) loan calculator, so run them yourself first and see what a lender sees.

A $3,000,000 sale with an SBA buyer closes with about $2,850,000 paid to you at settlement and a $150,000 standby note that stays unpaid for the life of the loan. The inputs are a $3,000,000 purchase price and $650,000 of SDE. For simplicity, assume total project cost equals the price and there is no owner-occupied real estate in the deal.

The $150,000 note carries no principal or interest payments for the entire term of the SBA loan. It is documented on SBA Form 155, and interest may accrue and be added to the balance. You do not get paid out early. The 36-month seasoning rule applies to seller notes that are paid as agreed, which is a different structure.

Now test the $650,000 of SDE. A lender does not run coverage on SDE. It runs it on EBITDA, which is SDE minus a market-rate salary for the manager who replaces you. The loan payment must fit under that EBITDA at 1.25x. The note on standby does not count against it.

This deal also hits two other gates. The price is above $350,000, so the lender orders its own independent valuation. At exactly $3,000,000 with no real estate carved out, a Quality of Earnings report is also required, and the lender must use the QoE's normalized earnings in the coverage calculation. If your add-backs shrink in that report, the coverage shrinks with them, and so does the price the lender will support. Use the business valuation calculator to check your SDE against current multiples before you set an asking price.

You negotiate six points, and on three of them the SBA rules, not you or the buyer, set the outcome. Know which is which before the LOI, so you spend your effort where you have room.

Points the rules mostly settle

• Standby terms. If the buyer uses an SBA loan and you carry a note to meet the injection, the note must be on full standby for the life of the loan. You can negotiate the interest rate on it. You cannot negotiate payments during the loan term.
• Valuation gap. If the lender's appraiser values the business below your price, the lender holds the pen. The buyer either brings more equity or you accept more standby debt, or the price drops.
• Coverage. The 1.25x test is an SBA requirement, so the buyer cannot talk a lender out of it. Your price has to fit the earnings the lender accepts.

Points where you have room

• Asset sale versus stock sale. Buyers financing with a loan generally want assets, and the structure changes your tax bill. Read asset sale vs stock sale before you agree.
• Price allocation. How the price is split between equipment, goodwill, and a non-compete changes what you owe. Depreciation recapture and goodwill are taxed differently, so allocation is a negotiation worth a tax advisor's time.
• Transition and non-compete. Buyers will ask you to stay for a period and to stay out of your industry. Length and scope are open terms. A longer transition is a concession you can price.
• Representations and indemnity. The buyer's lawyer will ask you to stand behind your financials after closing. Narrow the scope and the time.

Competing offers are what move the open points. A confidential process that brings more than one qualified buyer to the table gives you something to trade, while a single buyer with exclusivity has little reason to concede any of them.

Owners lose price and time in a sale through six avoidable mistakes, and all of them show up before the LOI.

1. Pricing off SDE when the buyer needs EBITDA. If the buyer must hire a manager, the lender's coverage test runs on earnings after that salary. An asking price built on SDE alone will not survive the lender's math.
2. Counting add-backs you cannot document. Personal expenses run through the business, one-time costs, and owner perks need support. An add-back with no paper trail comes out in diligence, and the price follows it down.
3. Ordering your own valuation and expecting the lender to use it. When the Business Purchase Price is above $350,000, or buyer and seller are closely related, the lender orders its own valuation from a Qualified Source. A report prepared for you or for the buyer is not accepted. A sell-side analysis still helps you set expectations, but it does not replace the appraisal.
4. Ignoring the QoE trigger. At a $3,000,000 Business Purchase Price, a lender-reviewed Quality of Earnings report is required. Find the weak spots first. Our guide to quality of earnings reports shows what they test.
5. Telling employees or customers too early. A leak before a buyer qualifies can cost you staff and accounts. Share only under NDA.
6. Assuming everything is paid at close. With an SBA buyer, part of your price can sit on standby for years. Decide before the LOI how much of that you will accept.

Each of these can be fixed in the 4 to 8 weeks of preparation, which is why that stage comes before any buyer sees your numbers.

Start with your last two fiscal years of financials and compute SDE and EBITDA from them, because every later step depends on those two numbers.

1. Calculate SDE and EBITDA. Use the formulas above and label which one you are quoting.
2. Build the add-back schedule with documents. Attach invoices, payroll records, and bank statements to every item.
3. Run a price range through the calculators. Use the valuation calculator for the range and the SBA loan calculator for what a buyer's payment looks like.
4. Decide your structure limits. Settle how large a standby note you will carry and how long you will stay on for transition.
5. Talk to a tax advisor before the LOI. Ask what an asset sale does to your recapture and goodwill tax, and how a purchase price allocation changes it.
6. Choose how to go to market. You can sell without an advisor, or work with one. Munera's fee depends on the route. If your business matches one of Munera's active buyer clients, the buyer pays the fee and you pay nothing. If Munera runs a confidential buyer search, the fee is a success fee paid at closing, with no monthly retainer and a $5,000 engagement deposit credited against the fee at closing.

Munera works on businesses valued from $1M to $30M in enterprise value, so if yours falls in that range, the next concrete step is a confidential conversation about your numbers and your timeline.