United States guides

How to sell a business in the US

Selling a US business generally follows a set sequence: prepare the financials, get a valuation, market confidentially under NDA, negotiate a letter of intent, go through buyer due diligence, then close through a purchase agreement and escrow. Two decisions matter most for your outcome: whether the deal is structured as an asset sale or a stock sale, and whether you use a broker (licensing for which varies by state).

By the bizflip team · Published 29 August 2026 · Facts checked 29 August 2026 · Sources listed below

Selling a business in the US usually takes six months to a year from the decision to sell to money in the bank, longer for larger or more complex companies. The steps are fairly standard — prepare, value, market confidentially, negotiate a letter of intent, survive due diligence, then close — but two choices along the way (asset sale vs. stock sale, and whether you use a broker) change your tax bill and your legal obligations. This guide walks through the process in order and flags where the rules vary by state or depend on your own numbers.

Prepare the business before you go to market

Buyers, and any lender behind them, will want to see three years of tax returns, profit-and-loss statements, and balance sheets that agree with each other. The U.S. Small Business Administration recommends starting this 12 to 24 months before you plan to sell, so financials have time to look clean and consistent rather than rushed.

Get a valuation

The SBA describes three common approaches to valuing a small business: the income approach (projected earnings and risk), the market approach (what comparable businesses sold for), and the assets approach (total assets minus liabilities). In practice, most small business sale prices land as a multiple of earnings (SDE or EBITDA depending on size), adjusted for growth, customer concentration, and how much the business relies on the owner. There's no single 'correct' number — a valuation is a defensible range, not a guarantee of what a buyer will pay.

Market the business confidentially

Business sales are usually marketed without naming the company. A one-page teaser goes out first with no identifying details; interested buyers sign a non-disclosure agreement (NDA) before they see a confidential information memorandum (CIM) with financials, operations, and the business name. Buyers aren't legally required to sign an NDA, but sellers routinely insist on one before disclosing sensitive information — protecting confidentiality is largely a matter of what you choose to share and when, not a specific statute.

Some owners sell directly; many use a business broker or M&A advisor. Broker licensing is not standardized federally — there is no single national 'business broker license.' Several states tie business brokerage to real-estate licensing: in Texas, for example, a real estate license is required when the sale involves a transfer of real property or an assigned lease — which covers most Main Street deals, though not a pure stock or no-premises sale. Other states have no specific licensing requirement for business brokers at all. Requirements, and how they're enforced, vary by state, so check with your state's real estate or professional licensing board before engaging or acting as one. Listing a business for sale on a marketplace like bizflip is free.

The letter of intent and due diligence

A serious buyer submits a letter of intent (LOI) setting out proposed price, structure, and key terms. Most of an LOI is non-binding — either party can walk away — but specific clauses are often drafted to be binding regardless: confidentiality, an exclusivity or 'no-shop' period that stops you negotiating with other buyers, and the governing-law clause. Read an LOI as if the binding parts are the parts that matter, because they are the parts a court will enforce.

After the LOI, the buyer runs due diligence: verifying financials, contracts, customer concentration, employment matters, and legal or environmental exposure. This typically takes 30 to 90 days. If the buyer is financing the purchase with an SBA-backed loan — the SBA 7(a) program is the most common financing route for acquisitions under roughly $5 million — the lender runs its own underwriting on top of the buyer's diligence, which can add time and will require the target business to meet SBA size standards.

Choose a deal structure: asset sale vs. stock sale

Most small business sales are structured as asset sales: the buyer purchases the business's assets (equipment, inventory, customer contracts, goodwill) rather than the legal entity itself, and can choose which liabilities to assume. This lets a buyer avoid unknown or contingent liabilities sitting in the old entity, and it gives the buyer a stepped-up tax basis in the assets acquired. Both parties must report an asset sale to the IRS on Form 8594, allocating the purchase price across defined asset classes (cash, securities, tangible property, intangibles other than goodwill, and goodwill/going-concern value) using the residual method — the same allocation figures must appear on both the buyer's and seller's returns.

A stock sale (or membership-interest sale for an LLC) transfers the entity itself, including its contracts and licenses intact — useful when contracts can't be reassigned — but the buyer inherits the entity's liabilities, known and unknown, which is why buyers usually resist it for smaller deals. How the IRS treats each asset class in an asset sale determines whether your gain is capital gain or ordinary income; for a straight sale of stock or membership units held over a year, gain is typically taxed as long-term capital gain. For 2026, the federal long-term capital gains brackets are 0%, 15%, and 20%, with the 15% rate starting at $49,450 of taxable income for single filers ($98,900 married filing jointly) and the 20% rate starting at $545,500 single ($613,700 married filing jointly); a 3.8% Net Investment Income Tax can apply on top for higher earners. Which structure and which allocation is best for you depends on your entity type, your basis, and your state's tax treatment — this is not something to decide without your accountant or tax adviser.

Before you commission a formal valuation, you can run bizflip's free valuation calculator at /valuation — it's ungated and the methodology it uses is disclosed on the page — to get a starting range.

Sign, close, and get paid

The purchase agreement — drafted or reviewed by an attorney on each side — sets out the final price and structure, representations and warranties about the business, indemnification for breaches, any working-capital adjustment, and typically a non-compete covering the seller. The SBA's guidance specifically flags listing inventory, identifying all parties, specifying how the business is run before closing, and documenting broker fees and adjustments in this agreement.

At closing, funds usually move through an escrow agent, attorney trust account, or the buyer's lender rather than directly between buyer and seller. It's common for a portion of the price — often a single-digit-to-low-double-digit percentage, negotiated case by case — to be held back in escrow for a period after closing to cover any indemnification claims that surface once the buyer is running the business. Leases, licenses, and permits need to be formally assigned or reissued to the buyer, and any liens on business assets need to be paid off or released as a condition of closing. Once those steps clear, ownership transfers and the transition period — the seller staying on briefly to hand over relationships and know-how — begins.

Sources

Every load-bearing claim in this guide, and where it comes from:

Ready for your own number? The valuation calculator is free and ungated, and its methodology is public.