Preparing to Sell: 10 Major Steps in Selling a Business

The sale of a business is typically the single-most significant event in an owner’s business life. As most owners have never sold a business, any apprehension is understandable. If you are contemplating or preparing to sell your company, we believe it’s critical to understand the typical components of a deal so that you will be ready to embark upon this journey. 

In this blog series, 10 Major Steps in Selling a Business, we examine the important elements common across most sales in collection agency M&A through a case study of a previous transaction our firm completed. We will call the selling company “Company, Inc.” to preserve confidentiality. This first part of the series explores key steps to take while preparing to sell. 

Prepare the Information Memorandum 

Sometimes called “the book” or “the memorandum,” this piece describes the selling company so buyer candidates can gain an initial understanding of the opportunity. It can be less than 10 pages or more than 75 pages, though you and your advisor may choose to limit it to just an executive summary with additional information to be provided at a later date to serious buyers only. 

For Company, Inc., we prepared a traditional book that included key details about its history, clients, markets, services, management & staff, systems, and financial performance. Most of the client names were omitted to protect confidentiality, with only a few listed by name because they could further a buyer’s interest by knowing their identity. It’s important to note that if the selling company possesses significant client concentration – i.e., over 25% of revenues generated by a single client – then client name(s) should be disclosed. An important part of describing the financial performance is illustrating what the true cash flow of the business would be under new ownership. This is necessary given the perks enjoyed by many owners of mid-market businesses and the one-time or unusual costs that arise and need to be explained. Knowing which obvious and not-so-obvious items that buyers look for is essential to this process. 

Determine Which Buyers to Approach and How to Approach Them 

While you are preparing to sell and gathering your information, you’ll also need to determine who you will approach from the vast universe of potential buyers. Depending on the size of the company, you might approach large industry buyers, high net worth individuals, financial buyers, or perhaps buyers from related industries. Engaging an M&A advisor that specializes in your industry can give you an advantage, as it helps you select the right buyer candidates. A knowledgeable advisor will also help determine which industry buyers to include in the sale process. They may also conduct additional buyer research, which should be done in any case. 

You will also need to determine how to engage the buyers you select. Will you approach just one buyer? This is known as a “negotiated transaction.” Will you meet with a limited pool of buyers? This process is referred to as a “limited auction.” Or will you approach a wider group to ensure maximum exposure? That is a “broad auction.” On occasion, you might receive a completely unsolicited offer from someone who wants to buy your business. We would be remiss if we didn’t mention that in order to maximize your value potential, it is important to maintain a competitive process up until the point in which you are prepared to take your company off the market. While deals can and do get done on a regular basis between a single seller and buyer, sellers will never know if they have maximized their value and preferences in a transaction unless they position themselves to negotiate multiple offers and choose the best one. 

For Company, Inc., we approached a moderate sized group of very qualified buyers to create competition. Because of our experience in the industry, we knew who would be interested and why, how they typically structure deals (i.e. cash and other components), how quickly they can close deals, and the resources available to them. 

The selling process often lasts four to six months, sometimes shorter, sometimes longer, depending on either side’s focus on the transaction. Fortunately, Kaulkin Ginsberg can help you navigate those choppy waters. We have worked with small, mid-sized, and large privately-owned companies, Fortune 500 corporations, and financial investment firms on their collection agency M&A strategies for thirty years. Whether you’re seeking professional sell-side representation, assistance forming a partnership or joint venture, a transaction assessment, or a valuation, Kaulkin Ginsberg will guide you through the process. For more information, or to schedule a confidential discussion of your business goals, contact us here or at

Stayed tuned for the rest of this 10-part series.