Selling a Business: What It Is Worth, and Who Helps You Sell It

Your profit is a fact. Your price is a judgment about whether that profit survives you.

Three different jobs sit behind that sentence, and the industry gives them names that hide what they are. Someone figures out what the business is worth. Someone finds a buyer and manages the sale. Someone spends the years beforehand making the business worth more. This page explains who does each job, how the price actually gets set, why the price is not the money you keep, what the help costs, and why the work starts years before a sale.

Who does what

A business broker represents an owner selling a smaller business. The broker estimates a price, advertises the business without revealing which business it is, screens buyers, and manages the sale through to closing. The industry's association is the IBBA, and its CBI credential can be checked against the association's own member directory rather than taken from a website.

An M&A advisor does the same work on larger sales. M&A stands for mergers and acquisitions, though for almost every owner reading this there is no merger — someone buys the business and owns it. The real difference from a broker is the method. A broker usually finds a buyer. An advisor usually runs a contest, approaching many buyers at once so they bid against each other. It works: in early 2026, 83% of sales above $5 million drew at least three offers, and 18% drew ten or more.

A valuation professional answers only the worth question. You need one for a sale, but also for buying out a partner, a divorce, settling an estate, or giving shares to your children. Those uses are not interchangeable, for reasons explained further down.

An exit planner works years ahead of any sale, preparing both the business and the owner. Their association is the Exit Planning Institute.

The simplest map: the valuator prices the house, the broker sells it, the advisor starts a bidding war over it, and the exit planner spent the prior three years renovating it.

Credentials and licenses

None of these credentials are required by law. What separates them is that only the valuation ones get tested regularly by someone with a reason to tear them apart — a judge, an opposing expert, the tax authorities. The three worth knowing are ASA, ABV, and CVA. In a courtroom or a tax dispute, ASA and ABV are the ones you see most often.

Licensing varies and is worth one question rather than an assumption. Some states require a real estate license to sell a business. Federal rules changed in 2023 so that advisors handling most small and mid-sized sales no longer have to register with the Securities and Exchange Commission, the federal agency overseeing investment markets. States set their own rules on top of the federal ones, and those still differ. Ask what your state requires, and ask the person you are about to hire.

How the price gets set

Start with the idea the whole field rests on. A small business sells for a few years' worth of its yearly earnings. That number of years is called the multiple. Earn $200,000 a year, sell at a multiple of three, and the price is $600,000.

Which earnings? For a business the owner works in daily, the standard measure is seller's discretionary earnings, or SDE. It is the total financial benefit one working owner takes out of the business in a year. You start with the profit on the tax return and add back the owner's pay, the owner's personal expenses run through the business, interest, taxes, the paper charges for equipment wearing out, and any one-time costs that will not repeat.

Real numbers, from BizBuySell's report on sales that closed in the second quarter of 2026: the typical small business sold for $349,250, on earnings of $155,921, at an average multiple of 2.7. Most small businesses land somewhere between two and four times SDE. Businesses with steady repeat income go higher. Businesses that depend on the owner go lower.

Here is why, in one comparison. Two heating and air conditioning companies each earn $400,000 a year. The first has one big commercial customer providing 60% of its revenue, and an owner who personally knows every client. The second has two hundred maintenance contracts on automatic payment, and a manager who runs the schedule.

Same profit. The second sells for far more — a full point of multiple or more, which on $400,000 of earnings is a difference of several hundred thousand dollars in price. The buyer is not paying for the profit you already made. The buyer is paying for the profit that will still be there next year, once you are gone. One big customer who could leave, and an owner who cannot be replaced, are exactly what put that future profit in doubt.

That is the honest limit of any quick estimate. The multiple is a market fact. The adjustments are judgment. The judgment is what you are paying a professional for.

SDE is not EBITDA

You will see a second earnings measure quoted: EBITDA, meaning earnings before interest, taxes, depreciation, and amortization. In plain terms, it is profit before loan costs, before taxes, and before the paper charges for equipment and other assets losing value over time.

One difference matters enormously. SDE adds the owner's pay back in. EBITDA does not. A business with $400,000 of SDE that pays its owner $150,000 has $250,000 of EBITDA — the same business, two numbers, nearly $150,000 apart. Multiply the wrong one by a multiple meant for the other and the answer will be badly wrong. Whenever someone quotes you a multiple, ask what it multiplies.

Bigger businesses earn bigger multiples

Size alone moves the price, for no other reason than size. Businesses worth under roughly $2 million — the segment the industry calls Main Street — are usually priced on SDE. Above that line, buyers switch to EBITDA and the multiples step up.

The reason is not sentiment. A larger business usually has managers, a wider spread of customers, and access to buyers with professional money behind them. Growing across that line is worth more than the extra profit alone suggests, which is why "sell now or build for three more years" is a financial question with a real answer, not a matter of temperament.

The price is not the money you keep

You do not sell the profit you made. You sell the profit that gets made without you.

Almost nothing misleads sellers more than the headline price, because very few small businesses are paid for in full, in cash, on the day of closing. Several things sit between the price and your bank account:

• Seller note. You lend the buyer part of the price. They repay you over several years, with interest. If the business struggles, you may not be repaid.
• Earnout. Part of the price is paid later, and only if the business hits agreed targets after you leave.
• Escrow holdback. Part of the price sits with a neutral third party for a year or so, released to you only if nothing the buyer later discovers contradicts what you promised.
• Working capital adjustment. The deal assumes you leave behind a normal level of inventory, supplies, and unpaid customer invoices, minus what you owe suppliers. Leave less than normal and the price is reduced at closing.
• How the price is split for tax. The contract divides the price across what is being sold: equipment, goodwill, your agreement not to open a competing business. Each piece is taxed differently. The same headline price can leave you with noticeably different amounts after tax, and the split the buyer prefers is rarely the one you would choose.

A lower price paid entirely in cash routinely beats a higher one with a third of it tied to three more years of your involvement.

This is the point of this page, one step further. If the price is a judgment about whether the profit survives you, then these terms are where a buyer records their doubt. An earnout is a buyer refusing to pay for a promise until the promise proves itself, at your risk, on your time. A seller note is a buyer asking you to fund your own exit. Depending on the owner does not just lower the multiple. It turns cash into a maybe.

Two things to do about it. Judge every offer on the cash you receive at closing and the terms attached to the rest, never on the price alone. And find out early whether a bank would lend a buyer the money to purchase your business — in the United States that usually means a loan backed by the Small Business Administration. If lenders will finance the purchase, many buyers can afford you and you choose among offers. If they will not, you are negotiating with whoever can pay cash.

What the help costs

Valuations come in two depths

There are two levels of valuation work, and the difference is not a technicality.

A calculation of value uses methods agreed with you in advance. It is faster and cheaper, and it is enough for planning and for knowing roughly where you stand.

A conclusion of value is the full version. The valuer chooses whatever methods the situation calls for, documents the reasoning, and produces a report built to be defended.

For a divorce, an estate, a gift of shares, or any dispute headed toward a court, the cheaper version may not survive the scrutiny. Ask which one you are buying before you ask the price. Expect the low thousands for a calculation and the high single-digit thousands or more for a full valuation, rising with complexity.

A broker's free valuation is neither of these. It is a sales pitch for the listing. It may be perfectly accurate, and it is not neutral.

Brokers are paid when you sell

Brokers handling smaller sales normally charge nothing up front and take a percentage at closing, usually around 10% and commonly between 8% and 12%. Watch three details:

• The minimum fee. Often $15,000 to $50,000 regardless of price. On a small sale, the minimum is the rate — a $200,000 sale with a $25,000 minimum is a 12.5% commission.
• The sliding scale on larger deals. The percentage steps down as the price climbs: for example 10% of the first million, 8% of the second, 6% of the third. Ask for the exact steps in writing. Naming the formula is not the same as stating the numbers.
• The tail. Most agreements keep the fee owed for one to two years after the agreement ends, if you eventually sell to a buyer the broker introduced.

Larger sales often add a monthly fee during the process, usually subtracted from the commission at closing.

None of this is a reason for suspicion. It is a reason to read the incentive. Your broker gets paid when the sale closes, which aligns them strongly with closing and only loosely with the last dollar of price.

Secrecy is much of what you are paying for

"Confidential marketing" is a small phrase covering a large fear. If your staff learn the business is for sale, the best of them start job hunting. If customers learn, they start hedging. If competitors learn, they call your customers.

Advertising the business without identifying it, releasing details in stages, and getting signatures on confidentiality agreements before anything sensitive changes hands is the bulk of what a broker does that you cannot do yourself. Ask any candidate exactly how they handle it.

Why the work starts years early

Every difference between those two air conditioning companies takes years to build. Reducing your reliance on one big customer. Getting the business to run without you. Turning one-off jobs into repeat contracts. Cleaning up the books so a buyer and a bank see the same numbers. None of it happens in the ninety days before you list.

Owners who first learn their number at sale time routinely discover the discount too late to do anything about it.

So learn the number early, even if you have no intention of selling. It turns a vague ambition into a to-do list — less dependence on you, more repeat revenue, cleaner books, a manager who runs the schedule. Every item on that list makes the business better to own, not merely better to sell.

In short

Valuators price, brokers sell, advisors run contests, exit planners prepare. The price is your earnings times a multiple that rests on judgment. The money you keep is that price minus the fees and minus everything the buyer pays only later, or maybe never. And the things that move both take years.

Which is the whole case for starting early. If the price is a judgment about whether the profit survives you, the years of work beforehand are your answer, ready before anyone thinks to ask the question.

The advisors listed here describe their own practice on their profiles.

Sources

• International Business Brokers Association — CBI credential and member directory; IBBA and M&A Source Market Pulse survey, first quarter 2026
• Exit Planning Institute
• BizBuySell Quarterly Insight Report, second quarter 2026 — typical sale price, earnings, and multiples
• AICPA Statement on Standards for Valuation Services — the difference between a calculation of value and a conclusion of value
• Securities Exchange Act section 15(b)(13) — the 2023 federal exemption for M&A brokers