Every business is different. Every seller is different. Every Buyer is different. The result of this is that every sell transaction is different. The truth is you can answer almost every question you have about the process of selling your business with “well that depends on several factors”. There is a method to the madness and a general outline of how things go but not all transactions will follow the script and some runoff the rails completely and must be navigated back on track. The following steps of the journey are generalized, and you can expect a similar experience, just know the potential exist for a deviation from course. Therefore, it’s critical that you utilize the services of an M&A broker.  Let’s dive into the journey.

TIP: Many times owners will stress about the many lists of things that must be taken care of during a business sale like, transferring vehicle titles, phone numbers, power, water, gas, and more. All these little details will be taken care of and you should not be stressed about the process. Your broker will guide you every step of the way.  

Firmly decide you are going to sell

     I know it may not seem like a valid step, but it is crucial to the success at the closing table. If you have reached your magic number, then sell the business and harvest the value. There are too many risks involved with keeping the business longer than you need to. Harvest the value and then start another business. But the absolute worst thing you can do is say “let’s put it on the market and see what happens”. Firmly commit to yourself that you are ready to sell the business. Until you reach this conclusion you should not proceed with the next steps.

Select the right M&A advisor

     You should think of your advisor as your guide to climbing Kilimanjaro. You must have one. Without one you will die. Ok that’s a little dramatic. Without one you limit your buyer pool. Without one you can make a terrible mistake that might cost you a million dollars or more. I’m not just saying this because I am a M&A advisor. If need help finding one call me.

Gather all the information needed

     You broker is going to give you a list of all the financial data they need. Take your time, find all the documents, and answer the questions accurately. This is not a time to guess or try to throw everything together before you walk out the door for dinner. The information has to be complete, and it has to be accurate. Wrong initial information leads to surprises during due diligence. Surprises during due diligence kills deals.

The broker provides an opinion of value

     Pricing the business accurately is critical to attracting the right buyer. Use an experienced M&A broker to recast your financials, determine the appropriate multiple and set a final asking price for the business. Remember there is a difference between asking price and selling price. An experienced broker will guide you and let you know when a fair offer is made.

Sign the listing agreement

     The broker will present the listing agreement to you and explain the agreement to you and what you are signing. Ask any questions you might have and do not assume anything. If you have a question about the process or the terms of the agreement, ask the broker to clarify the terms. It is critical that you understand the agreement and how much the broker is charging you for their service. This is not a time to try find the cheapest broker. When it comes to brokers, you get what you pay for. An experienced broker gets enough clients through referrals and does not have to discount fees. A broker that discounts fees is desperate for work and might be desperate for the commission of a closed sale no matter how much money you lose. An experienced broker will guide you and only let you close a fair deal.

Your broker will write a confidential information brochure

     This brochure is given out to prospective buyers and gives a teaser of information about your business without disclosing the actual business. Your broker is going to work hard to maintain confidentiality about your business being for sale. You should work hard to maintain that confidentiality as well.

Your broker will market your business for sale

     You broker will list your business on one or more listing services that advertises businesses for sale across the nation. You broker will also send the confidential information brochure to contacts they have that buy businesses like yours. This is again why it’s important to use a broker that has extensive experience selling HVAC bunsinesses. An experienced broker will have an extensive list of past buyers, consolidators. This will mean the best price for you at closing.

Your broker will qualify potential buyers

     Your broker will spend a significant amount of time qualifying potential buyers. The broker will determine if the buyer can qualify for financing, will close on the business, and is not a competitor or tire kicker just trying to gain insider information about your business. Once a buyer is qualified and they express an offer to buy, the broker will send over a confidential offering memorandum. This offers a little more information about the business, enough for the buyer to decide to move to the next level but still does not identify your business. On average your broker will weed out 100 potential buyers for every 1 buyer who is qualified. The qualified buyers will sign a confidentiality agreement also known as a non-disclosure that states that they will not disclose any information they receive about your business to anyone.

Buyer and seller initial call

     This is an initial phone call or zoom meeting in which you, your broker and the potential buyer talk about the business, and it generally covers the usual questions like “why are you selling the business”. Your broker will guide you on what your answers should be and what answers to avoid such as identifying suppliers by name or customers by name. The goal is to maintain confidentiality until the right time. The buyer will usually look through your blind financial data that has no employee names, no supplier names, and no customer names in the documents.

Buyer and seller in person meeting or business tour

     This is where you get to meet the potential buyer and answer more questions, ask them questions, and get to know each other a little better. The buyer also gets to know the business a little better. The broker will guide you and will stop you from answering any inappropriate or not advisable questions. If the buyers are not familiar with your type of business, they may ask questions that seem naive or not applicable. This is normal. The questions will be frequent during the entire process. Just provide the answers as your broker advises you to.  If they want to buy the business and can finance the deal, ignore the personality quirks.

Buyer makes an offer

     The buyer is going to continually ask for more information. This is an attempt to address his/her personal fears or perceived risks about the large transaction they are about to enter. This is normal. Do not take it personally. Try to provide all the information they ask for even if you have provided it before. The offer will most likely be subject to further discovery. Your broker will guide you when it is ok to release information. Its best to have negotiations completed before the due diligence phase begins. Here are some different ways an offer can come in. Term sheet outlines the basic terms and conditions of the offer to see if the buyer and the seller are close to terms before moving forward. The term sheet is non -binding to either party. Letter of intent outlines the basic terms and conditions and has more detail than a term sheet. The letter of intent is also non-binding to either party except for both parties to proceed forward in the process with good intent. Offer to purchase outlines the terms and conditions offered by the buyer and attempts to cover all the details of the transaction.  The offer to purchase covers the details to close and includes details for the acceptance and handling of earnest money. The offer to purchase is binding and compels both parties to honor the agreement. 


     There will always be some type of negotiation in the process. Remember the seller wants the highest price and the buyer wants the best deal. The broker helps both parties meet in a fair middle. During the negotiations you should not look at this as a full price or walk scenario. They buyer will be allowing you to take a significant amount of risk off the table and harvest a significant amount of wealth from your business. An agreement that gets you to close is highly valuable and you should be flexible enough to get there. The most important thing to know is that price and terms are like a seesaw. Look it up on google if you don’t know what it is.  A higher price usually means less favorable terms. The best terms usually mean a lower price. Most deals will include some sort of earn out, where the business must meet certain financial goals for you to receive the last portion of the sell price. The deal will also usually include a transitionary period where you must stay with the business to ensure a full and smooth transition to the new leadership. The good news is that you will most likely be paid for your time as a consultant. If you just want the drop the keys off at the closing table and head to Key West FL for a couple of months, the price will reflect that with a lower amount. This is where is critical to use an experienced M&A advisor for your broker. We have seen deals that were structured so that basically the buyer got a $4M dollar discount off the price due to an unreachable earn out. A good advisor will be critical for you to get the best terms at the best price.

Selling your business is a very emotional time. It’s not uncommon for you to experience the emotions of anger, frustration, impatience, sadness, regret, elation and more. The absolute worst time you should negotiate a large financial transaction is when you are experiencing one of these emotions. As a result, rely on an experienced M&A advisor to guide you in the negotiation is critical. Quoting the country music singer Kenny Rogers, “you got to know when to hold em, know when to fold em, know when to walk away, and know when to run”.  There are a couple of powers you can use during the negotiation process to try to shift the burden of emotion to the buyer. But to be the most successful it’s critical that you have the third party that is not emotionally involved in the transaction to guide you with experience and wisdom.  Here are some tips for you to use during the process.

Never seem desperate

     You buyer can sense desperation. If you respond to every inquiry in seconds. If you are impatient on deliverables such as letters of intent or signed non-disclosures. All of these create the perception of desperation. Let the process unfold at its natural speed. When you get a question, ponder the answer before you reply. Consider the pros and cons. Be deliberate with your answers. And ALWAYS send all communication through your broker or advisor. Your broker may intentionally wait until Tuesday or Wednesday after a three-day weekend to send communication or respond to communication. Just be patient there is a method to the madness. 

Never shoot from the hip with numbers

     Never quote a number that you have not thoroughly researched, thought about, and calculated to be true. If a buyer asks a question that involves a number that you do not know for a fact always respond, “I’m not sure let me research that and get back to you”. If you inadvertently say a wrong number that is to the advantage of the buyer, they will hold onto that number forever and never let you forget you said it.

Never chase a buyer

     If it has been a couple of days or several days or a couple of weeks with no response from the buyer after you sent your broker requested information. Just let it lie. If a buyer is serious, they will respond in due time. If they are not serious then the offer will be lower than ideal anyway so let them walk.

Always be prepared to walk away

     If the deal is not favorable, the offer is too low, the negotiations are not moving in the right direction, don’t be afraid to walk away. Your broker will tell you when it’s time to walk away. Trust your broker and walk away. 

Fully understand the terms

     When you want a higher price, buyers automatically want more terms. If you do not fully understand exactly what the terms are, ask your broker to explain them so that you understand. It is very common for you to have to finance part of the sale or carry some portion of the sales price over a period. The portion you carry will come with interest. Be flexible with how you get paid out in the deal.

Due Diligence

     After an offer has been made, negotiated, accepted, and earnest money has been deposited the due diligence will begin. This is where the buyer will attempt to find anything and everything. They will scour your financial documents, and anything related to the operation of the business. If you were totally up front and honest about everything, then this will just be a routine part of the process. It can be quick as one day or it can last weeks. If you tried to hide anything from the broker and the potential buyer, it will most likely come up. We call those deal killers. If the due diligence process does in fact find a deal killer, then the earnest money is usually refunded to the buyer.  If no deal killers are found, then we move to the final agreement.

Final Agreement

     This is the final purchase and sell agreement. An attorney will draft this document and usually the buyer and sellers’ attorneys work together to define all the details of the transaction. These details can be quite extensive and smaller negotiations about incidentals can pop up during the final agreement writing. Your broker will guide you during this process. The goal is to get an all-inclusive final agreement that leaves no surprises at the closing table or moving forward post transaction.

The closing table

     At the closing table all the intricacies of the transaction have been worked out and the deal will be signed (hopefully). All the closing documents have been written and the details of the deal have been defined. An attorney, closing agent or escrow company usually handles the transaction. Depending on the size of the company the closing can be fully completed in one day or when a fleet of vehicles are involved for example, transferring all the titles can take a couple of days or weeks to finalize. The commercial financing lender will request more information from the buyer and seller and sometimes gets a little carried away asking for too much documentation to reduce their liability in the transaction. This is normal do be concerned.

Transfer of ownership

     After the closing and the transfer of money from buyer to seller and the signing of all the closing documents, the transfer of the many related items will begin. For example, the phone number, the website, the email accounts, the domain names, and whatever hundreds of little pieces of business-related stuff that must be transferred. It is not uncommon for small amounts of money to change hand at this point such as a phone transfer fee, or power transfer fee, do not get caught up in the pennies and just take the high road. If the buyer requests for you to pay for small incidentals within reason, then just do it and let it go. If you have a question about anything, just ask your broker, they will let you know what is customary and what might be out of the norm. You will also have to train the new leadership and work together with the team to ensure a successful transition. This training is vital to the future success of the business and especially important if your deal included an earn out. If you want to get paid, the business needs to meet its goals. There will come a point where the buyer feels like they have got it and they no longer need your assistance.

Moving to your next life phase

     It’s common for every business seller to experience some sort of remorse after selling the company. It’s common for the company to get a quick rise in performance with increased sales or new branding. Sometimes this makes you sad that they are doing better without you.  It’s important that you have a plan for what you will do after you are no longer involved in the business. For a period of 6-18 months, you will feel like you might have made a mistake. The truth is you did not make a mistake and you made the smartest decision you could make to harvest your business wealth. It is just going to take a little time to transition to your next life phase. It is a good idea to consider counseling during this time to not only help you navigate the transition but also maybe work on yourself personally to improve your outlook, your happiness, and your relationships. You will reach the point where you look back and realize that selling your business was the best decision you made. It just takes a little time to process all your emotions and reach that point. The process is similar whether you are a seller or the buyer. To build wealth you will most likely be both at some point.