Selling your Washington business in 2022? We packed this guide with info

Have you been thinking about selling your business but are not sure where to start? Are you wondering how much your business is worth, what the current market is like, or what to expect? Seeing headlines about high valuations, inflation, interest rates, capital gains tax rates, or market activity? If you are wondering if 2022 is the right time to sell – read on.  

First, are you ready to sell? 

Is it your true and honest motivation? For some this is a straightforward “yes, let’s go!” and for others this requires much soul searching and reflection with loved ones or potentially your business partners. Being clear on this will save you a great deal of mental energy and time.

Second, keep your intent to sell confidential from employees and suppliers

Quick story to illustrate this point. I grew up working in a family-owned bakery in Ohio. We had a key supplier for the flour, sugar, shortening, baking mixes, icing, etc. that we relied on heavily to crank out 100+ different menu items each day. Most weeks my family simply called in the order we needed (no internet in 1991!). However, every three weeks or so “Bob”, our account manager, would stop by for a visit and to shoot the breeze. Bob was a gold mine of information on what mixes were / were not selling, products that competitors 150 miles away were experimenting with, and the health of other bakeries across the Midwest. My family ended up buying a bakery that Bob first alerted might be interested in selling. The lesson: people talk. 

It is critical to keep your plans confidential. It is ok to keep your plans from employees that have been working for you for 20+ years. In fact, keeping your decision to sell private is foundational to your ability to sell the business. Losing key employees decreases the value of the business and will concern potential buyers.  

Third, take a close look at your business

What do you think needs to be improved before selling? Some of these items may be small or inexpensive to knock out. Others may require more time, money, or sustained effort. Before acting on any of these – rank improvements in terms of impact to the value or health of the business.   

There may be other outside factors behind your decision-making process, perhaps you have health or financial issues and are thinking about selling “as is” – this is fine too and almost always manageable. 

Next, are you working in your business or on your business? 

There is a world of difference between the two! Prospective buyers will seek to assess the extent to which you “are” the business vs. managing a business. At Washington Business Brokers we carefully probe the extent of systemization, processes, and documentation in each area of a business as it helps to support a defensible valuation and strong negotiating position as we approach the sale process. 

Along these lines, here are some key “north stars” that we share with business owners as we begin the go-to-market process:

  1. Continue operating like you are going to be there for the next 5 – 10 years. Proceed with key hires, equipment purchases, supplier contracts, signing new accounts, etc.
  2. Continue the track record of growth as it is highly attractive to buyers; it is important you not only maintain but work to continue to grow the business. The selling process takes time, once we get into LOI’s (Letter of Intent) and Due Diligence we will be sharing quarterly, perhaps monthly, financials with a buyer. If a buyer starts to see growth taper off or revenue decrease it will invite questions.
  3. To the extent possible, get yourself out of the day-to-day operations. Concentrate on strategy, vision, and execution. Reflect on your weekly activities for dependencies that employees, customers, or suppliers may have related to your role.
  4. Review your accounting and financial systems to ensure they are in working order. Minimize running personal expenses through the business and think about showing higher profit (pay more tax). Why? Buyers and banks love this. It works to your advantage as an owner / seller as you will ultimately benefit from a higher valuation multiple.

In addition, other questions we cover before embarking on the sale process include:

  1. How would you describe your role in the business? Could you take a 1-week vacation and the business continue to run without you?     
  2. Tell me about your senior folks. Describe their roles, years with you, decision making authority, and anything you believe is relevant.
  3. Any prior or pending litigation?
  4. Do you have additional legal entities registered with the State? Any revenue / expenses in the other entities? Do you intend to hold onto any of these entities? Confirm ownership of each legal entity.
  5. Any key trademarks, copyrights, licenses, or patents? If so, do you intend to include these in a sale?   
  6. Help me understand your market and key channels. Market size as well as your competitive and product position.
  7. Do you own or lease your space? If you own it, do you intend to keep the real estate after selling the business? Is the business paying market rate rent for the space? If you lease space we will want to review your lease early into the process and may need to have a call with the landlord / owner of the facility to explore leasing scenarios with new ownership. 
  8. Do you have any non-negotiable deal terms or business valuation considerations we should be aware of?

You are probably beginning to see the benefits of enlisting a professional business broker to get an objective view of your business, improvement areas that you may have overlooked, what to expect in the selling process, and potential goal posts on a value range. 

So what should you expect when selling your business?

In most business transactions it is ideal to know what to expect before beginning. So what should a business owner expect when selling their business? At a macro view there are three, high-level steps:


This includes organizing required documentation, reviewing financial statements and business tax returns, insight into the operating model and any unique business characteristics (product, sales channels, marketing, customer base, supply chain, etc.). As your business broker we prepare three deliverables in this step:

  • Value assessment based off an in-depth analysis of your financials and private market comparables
  • Blind business profile. This is a 1 or 2 pager that masks the identity of you and the business; it is used to draw interest from prospective buyers. Our team vets each prospective buyer after they have completed and signed a non-disclosure agreement
  • Confidential Business Review (CBR). Also referred to as a “marketing package”, this document reveals the identity of the business and goes into detail on the financials, SWOT analysis, and operating model. For context, these can range from 10 – 60 pages in length depending on the size and complexity of the business


This kicks off when your business is ready for market. We execute a targeted, confidential plan to engage qualified, strategic buyers. This includes:

  • Showcasing your business on a number of different business for sale and industry specific platforms
  • Pinging active buyers (owner operators, private equity shops, and investment offices)
  • Proactive outreach to targeted buyers
  • Tapping our network of seasoned brokers, CPAs, SBA lenders, and other deal professionals

Negotiation, due diligence, and closing

  • We bring negotiation and transaction expertise to the Purchase Sale & Agreement process. In fact, terms are often more important than price. At Washington Business Brokers we have 225+ terms / clauses used in previous transactions to draw from
  • We coordinate efforts across the team of buyer / seller advisors
  • We help you avoid obstacles to a successful sale

It sounds straightforward, right?  The keys to navigating the sales process are strong systems and experience. I’m referring to process expertise compiling documentation buyers will expect to see, valuing a business, confidentially marketing it, screening buyers for both fit and financial capacity, as well as in negotiating and closing. I invite you to read more about this domain expertise on our Services page.

Now I will provide additional insight into 8 core steps in successfully selling a business:

1. Select and retain advisors

Along with your business broker, the individuals you retain to represent you will have a large impact on the total transaction value and time to complete the transaction. We frequently recommend you consult with your CPA early into this process to review your personal tax situation and financial goals. Topics that you will want to discuss with your CPA may also include any preference for an asset or stock sale, openness to seller financing, and other tax minimization strategies. For larger businesses this step may also entail consulting an attorney.  

2. Business valuation

Valuing a business is a critical step when preparing a go-to-market plan. You leave money on the closing table by setting the price too low; conversely if you set the price too high the most qualified and sophisticated buyers won’t even inquire – they simply move on to an appropriately priced business. Use only professionals with valuation credentials and expertise. At Washington Business Brokers we pride ourselves on each broker maintaining a CPA license and/or valuation credential (compare us to others and see for yourself!).       

3. Confidential Business Review

The quality of the marketing information provided to prospective buyers establishes the first impression of what you have built. Ensure that it is well written, comprehensive, accurate, and timely.  This step cannot be underestimated in importance – it is when prospective buyers say “wow” – or not.  When we consult with business owners we provide examples of our deliverables; we are told again and again by prospective buyers that these set us apart. Think rich visuals, incorporating video and QR codes, and other best in class marketing tactics.

4. Buyer qualification    

Your advisor and business broker must be able to manage prospects and the process so that you remain focused on operating your business while we screen out unqualified buyers and tire kickers. To this end, we have invested in NDA / buyer registration technology on our site that kicks off a multi-step verification process within our CRM. These investments in technology benefit you in the form of a more efficient, well run process – which ensures you receive maximum value for your business.

5. Due Diligence

Tight management of the due diligence process is foundational to minimizing the time to complete your transaction. Your advisor / business broker needs to understand what requests are reasonable, which are not, and how to address questions without creating new ones.

6. Negotiation

Perhaps the most important skill set of your advisor is the ability to know what to negotiate, what not to negotiate, and how best to ensure that you receive the best price and terms possible.  

7. Financing

Frequently overlooked at the start of the sale process, an understanding of financing structures and the dozens and dozens of available term sheet items will further maximize your net at closing.

8. Closing / Funding

Assisting your buyer in funding the transaction is often left to the seller and their advisors (if any). You want a business broker / advisor with SBA and commercial lending contacts so that we can pull in expertise and banks with the appropriate lending appetite when needed.  

Now, what steps do you take when you are ready to sell your business?

1. Get your house in order

Lack of financial preparation is a big hurdle for many small business owners. If you were to put your house on the market, you would spend some time cleaning it up and making it presentable, the same is true for your business. I am not talking about making sure your lobby / entrance, inventory, or shop floor are clean – I am referring to your financials.

All too often I meet with business owners who have out of date financial statements or worse yet, no financial statements at all. They operate their business based on how much cash they have in their bank account. This makes it exceedingly difficult to instill confidence in potential buyers that your business is run profitably. Often, the most important part of due diligence for potential buyers is verifying accuracy and historical trends of your profit and loss statement and other financials. Therefore, the most important part of preparing to sell your business is having accurate, timely and profitable financial statements.

2. Pay more tax

Let’s be honest, if you are a business owner you are comingling funds. I can almost guarantee that you are running personal expenses through your business. That is great, I am all for that as a business owner!  

Reporting a lower business income is one of the benefits of being a business owner and our tax code, as owners we should enjoy some perks, but this can be a problem as you approach selling your business. In contrast to publicly traded companies that have a goal to show as much profit as possible, and therefore incur a high tax bill, to show confidence to their stockholders that the company is worth holding on to, small business ownership encourages the exact opposite approach. We want to show as little profit as possible, therefore minimizing our taxable income.

Why does this matter? Because a transaction expert, business appraiser, or the buyer’s lender will come in to establish a valuation or sales price, they are going to use your profit as a major factor in that valuation. Now that you’ve minimized your taxable income, you’ve also just minimized your Business Valuation.

Here is the solution: ensure that any non-business related expenses run through the company are clearly identified on your internal financials. This allows Washington Business Brokers or other experts to “add-back” all the non-business related expenses to your bottom line, therefore increasing your true profit and business value. 

3. Clearly articulate what makes your business unique

Can you explain to a potential buyer why and how your business is different than your competition?  You should be able to do this without a second thought. Why? Because you should have already identified this a long time ago and built an entire marketing plan and strategy articulating this to your customers.

A new buyer will want to know not only how you acquire new customers but also why you are unique and how you differentiate yourself from your competitors in Bellevue, Everett, or Spokane.

4. Study your competition

While you want to make sure you are unique and different from other competitors in Washington, there is a lot you can learn by being aware of what your competition is doing and why. Are you aware of the sales tactics, marketing, and social media of your competitors? What strengths and weaknesses do they have? Being aware of this not only helps you stay on top and in front of your industry but also gives you ideas for additional products and services that are being underserved in your niche.

5. Be informed on business value / sales price

Do you have a “walk away number” that it would take for you to sell your business or another number in your mind that your business is worth? If so, how did you arrive at that number? Nearly 80% of the time I meet with business owners, that number is not realistic. It’s too high. Business owners are proud of the business they have grown and often overinflate the value in their minds.

A Washington Business Broker will help you with a realistic and accurate value for your business based on an analysis of your financials, competitive positioning, and private market comparables.  

6. Willingness to leverage professionals

You are an expert at running your business, but selling a business is likely not your area of expertise. Business owners that try to sell on their own, without professional help, can save on the broker fee but the likelihood of them selling on their own, without any help, is frequently less than 10%. Besides that, a Washington Business Broker can usually help you obtain a high enough price through professional representation that the broker fee isn’t an issue because it’s more than you could get on your own.

It’s very hard to maintain confidentiality if you try to sell on your own, in addition the marketing, discussions with buyers, negotiation, due diligence, and closing all require focus and effort. You have a business to run!  Your best path is to continue running the business well and bringing in a market professional to help you achieve your goals. 

7. Consider seller financing

In some industries the likelihood of an all-cash offer is not high. All cash offers can also be detrimental to sellers from a tax perspective. Instead of getting a large chunk of change at closing, today’s buyers are more likely to need seller financing to close. Most business acquisitions in Washington require third-party financing, most commonly from the SBA. This type of a loan requires the seller to carry a small note to be paid over time.

60 – 70% of businesses are purchased with seller financing involved, the likelihood of you attracting buyers based on your willingness to carry financing will considerably increase your pool of prospects, and therefore, increase your ultimate selling price.  

8. Think through a transition plan

If a new buyer comes into your business, what is the plan to transition them successfully to running and operating the company? Buyers will almost always require a training period where the seller will stay and train the new buyer giving them the experience and confidence needed to take over. Many owners are so focused on selling that they don’t think through this transition.

What is worse, many owners have been operating for so long, they really don’t have any operations manuals or processes in place. Just ‘knowing it off the top of your head’ is a big mistake; how is a new buyer supposed to feel confident they can come into your business if you are not there, and everything depends on you being there because there are no processes, systems, and procedures in place?

Spend time now building your systems, process, and procedures so a new buyer has a clear transition plan.

9. Know your numbers

I saved the best for last; this is by far the biggest struggle for business owners. They are so caught up in the whirlwind of day-to-day operations that they don’t really know their numbers.

Do you know the following?

The average sales value per transaction?

The average number of transactions per customer?

The average number of referrals per customer?

The average lifetime value per customer?

How has your sales cycle / pipeline changed over the last 3 years and why?  

What product is most profitable?

What marketing and client acquisition channel is most profitable?

I could go on asking different questions that you should and must know. Knowing these things shows the potential buyer you run your business like a business and make informed decisions, not emotional reactions.

That is it for today – more to come in a future post. Please forward or share this content if you find it valuable. As always, thank you for reading! 

At Washington Business Brokers we are experts in valuation, optimizing a business for sale, buyer identification and qualification, negotiation, deal structuring, and closing. Our strategic advisor, Glen Cooper, has sold 500+ businesses in his career and is a nationally recognized author and trainer in selling private businesses.

We do not sell you on selling your business or buying one. Instead, we listen, provide options and expertise, and ultimately partner with you to accomplish your goals.

If you would like to better understand the value of your business or learn more about the process of confidentially selling:

call or text 937.344.8750
email [email protected]
or schedule time for an exploratory, free chat here

Conversations are always confidential and there is no commitment. We will be ready when you are. Put our team to work for you!

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