Most people sell one business in their life. The buyer across the table may have bought three. The broker has done a hundred. You’re the only person in the room learning the process while it’s happening.
So here’s the sequence, in the order it actually happens, with the parts that cost sellers money marked.
Step 1: You get an offer before you’re ready
This is how it usually starts. A competitor, an employee, a private buyer, or a broker’s client approaches you. Suddenly there’s a number on the table and a sense that you need to move fast.
You don’t. The weeks before you sign anything are the only part of this process where you have full leverage, and sellers give them away constantly.
Two things worth doing first: get your records in order, and get your tax picture from your CPA. Deal structure changes what you actually keep, and the structure gets set early — often in the letter of intent, before anyone’s thinking about taxes.
Step 2: The letter of intent
The LOI sets price, structure, and timeline. It’s mostly non-binding, but not entirely — exclusivity, confidentiality, and any deposit terms usually do bind you.
What matters to you as the seller:
The exclusivity window. You’re agreeing to stop talking to other buyers for 30, 60, 90 days. If this buyer stalls out on financing at day 75, you’ve lost a quarter and any other interested party has moved on. Keep the window as tight as the buyer’s diligence actually requires.
Whether the price is really the price. A number in an LOI is a starting point. Buyers routinely revisit it after diligence. That’s normal — but a buyer who leaves themselves unlimited room to renegotiate is a buyer you should ask harder questions about.
Asset sale or stock sale. Most small business sales in Pennsylvania and New Jersey are asset sales, because buyers prefer them — they pick up what they want and leave your liabilities behind. That preference has real consequences for you, including tax consequences. Settle this with your CPA before it’s locked in.
Step 3: Diligence, where you’re the one being examined
The buyer’s lawyer and accountant will ask for everything: financials, tax returns, contracts, leases, employee records, insurance, licenses, any litigation, any loans, any liens.
Two things go wrong here.
The first is disorganization. If it takes you three weeks to produce a customer contract, the buyer starts wondering what else isn’t buttoned up. Slow diligence doesn’t just delay a deal — it changes how the buyer prices risk.
The second is surprise. Something turns up that you knew about and didn’t mention: a handshake deal with a vendor, an employee who was never properly classified, an expired license, a lease that needs the landlord’s blessing. Anything a buyer discovers on their own costs more than the same thing disclosed upfront. Disclosure is a negotiation. Discovery is a problem.
Step 4: The purchase agreement
This is the real document. Everything before it was a preview.
The parts sellers should read closely:
Representations and warranties. You’re making formal statements about your business — that the financials are accurate, that you own what you’re selling, that you’ve paid your taxes, that there’s no litigation you haven’t mentioned. If one turns out to be wrong, the buyer may have a claim against you after closing. This is the section where post-closing disputes are born.
Indemnification. How long you stay on the hook, and for how much. There’s usually a cap and a floor, and both are negotiable.
Escrow or holdback. A slice of your purchase price — often 5% to 15% — sits with a third party for a year or more to cover any claims. Know the amount, the length, and what releases it.
What you’re still doing after closing. Transition help, a non-compete, sometimes a consulting arrangement. Each of these is a commitment with a real cost to your time.
Step 5: The parts nobody puts on the calendar
These are the items that blow up timelines:
Landlord consent. If the business has a location, the lease has to move to the buyer, and most commercial leases require the landlord’s written consent to assign. Some landlords take weeks. Some use the moment to renegotiate terms. Some want your personal guarantee to survive. Start this early — it is the single most common reason a closing date slips.
Contract assignments. Customer and vendor contracts often can’t be transferred without the other side signing off. If a large customer contract needs consent and that customer is a big chunk of your revenue, the buyer will care a lot.
Licenses and permits. Depending on your industry, some can’t transfer at all — the buyer has to apply fresh. In regulated industries this can be the longest item on the list.
Employees. In an asset sale, your employees are generally terminated by you and rehired by the buyer. That means final paychecks, accrued time, benefits cutoff, and a communication plan. When and how you tell your team is a real decision with real consequences.
Payoffs and liens. Any loan secured by business assets has to be cleared at closing. So does anything a prior lender never released.
Step 6: How you actually get paid
Rarely all cash at closing. Common pieces:
- Cash at closing — the bulk of it, usually
- Escrow or holdback — yours later, if no claims
- A seller note — you’re financing part of the purchase and getting paid over time, with the buyer’s continued success now being your problem too
- An earnout — additional money if the business hits agreed targets after you’ve stopped running it
Seller notes and earnouts are how deals get done when the buyer’s financing has a gap. They can be reasonable. They’re also where sellers end up disappointed, because the number they told friends they sold for and the number they eventually collected weren’t the same.
Step 7: Closing, and the year after
Closing itself is usually anticlimactic — signatures, wires, keys. The year after is when the agreement you signed actually matters: the escrow release, the indemnification window, the non-compete, whatever transition duties you agreed to.
How long all this takes
For a straightforward small business sale, three to six months from signed LOI to closing is a fair expectation. Longer if there’s SBA financing, regulated licensing, a difficult landlord, or messy records. Anyone promising you 30 days is either simplifying or hasn’t hit the landlord yet.
The pattern we see most
A seller signs an LOI with a good price and a 60-day exclusivity window. Diligence starts. The buyer’s lawyer asks for the lease, and it turns out the lease expires in eight months and requires landlord consent to assign. The landlord wants to talk about a rent increase before consenting.
Now the seller is at day 55, the buyer’s financing commitment has an expiration date, and the price conversation reopens — with the seller’s alternatives gone, because they stopped talking to everyone else two months ago.
Nothing in that story is a legal problem. It’s a sequencing problem. But the sequence was set in a legal document.
What to do next
If someone has approached you about buying your business — even casually — the useful move is a conversation before you sign the LOI, not after. That’s when the structure, the timeline, and the exclusivity window are still yours to shape.
Holmes Business Law represents sellers and buyers of businesses across Pennsylvania and New Jersey — letters of intent, purchase agreements, seller notes, lease assignments, and contract transfers. We work alongside your CPA on the tax side.
