Short answer: start two to three years before you plan to sell. Clean up your books, make the business run without you, build recurring revenue, get a valuation, plan the taxes, and decide what life after the sale costs. Buyers usually look at the last three years of financials, so the work you do now shows up in the price.
Most owners start preparing when a buyer calls. By then, the numbers that set the price are already on the books. This checklist is written for trade owners, but it works for most small businesses.
Thinking about selling or retiring in the next few years? Schedule a complimentary consultation with Ben Loughery.
Three years out
- Separate personal expenses from the business so profit is easy to see.
- Get CPA-prepared financial statements, not just tax returns.
- Get an independent valuation to see where you stand.
- Start building recurring revenue: maintenance agreements, service plans, commercial contracts.
- Name a lead technician, operations manager or office manager who can run the day-to-day.
- Start or increase retirement plan contributions. See retirement plans for trade business owners.
- Review your entity type and how you pay yourself with your CPA.
Two years out
- Step back from selling every job and answering every call. Track how the business performs without you.
- Put key-employee agreements or retention bonuses in place for people a buyer will want to keep.
- Document processes: pricing, dispatch, hiring, safety, warranty handling.
- Clean up leases, vehicle titles, licenses and contracts so they can transfer.
- Work out what you need from the sale to retire, including taxes and health insurance.
- Update your estate plan, and consider whether gifting or trusts make sense before the value is set.
One year out
- Talk to an M&A advisor or business broker, and interview more than one.
- Organize documents for due diligence: three years of financials, tax returns, customer lists, contracts, insurance.
- Model how different deal structures affect your after-tax result: cash, earnout, rollover equity, seller financing.
- Plan charitable giving and Roth conversions around the year of the sale.
- Decide how the proceeds will be invested and how much income you'll draw.
At the letter of intent
- Have your CPA and attorney review the purchase price allocation and asset vs. stock structure before you sign.
- Understand how much of the price is guaranteed versus contingent.
- Know your plans for the employment or consulting period after closing.
For more, read our guides to selling an HVAC business and selling a plumbing or roofing business, or see business owner planning.
Want help building your own timeline? Schedule a complimentary consultation.
Frequently asked questions
- How far in advance should I prepare to sell my business?
- Two to three years. Buyers usually review the last three years of financials, so improvements made early show up in the price.
- What makes a trade business more valuable to buyers?
- Recurring revenue, clean financials, a team that runs without the owner, and licensed or skilled employees who are likely to stay.
- Do I need a valuation before selling?
- It helps. An independent valuation shows where you stand and what to improve before buyers start making offers.
- What documents do buyers ask for?
- Usually three years of financial statements and tax returns, customer and contract lists, leases, insurance, employee information and licenses.
- When should I involve a financial advisor?
- Early — ideally before you sign a letter of intent, so the deal structure fits your taxes, retirement income and estate plan.
