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Buy and Sell a Business: 2026 Practical Guide

Quick Answer

Buying and selling a business require aligned valuation (typically 4x to 8x EBITDA for established firms, sector-dependent), clean deal structure (asset sales most common, with 70-90% cash at close plus holdback or earn-out), tight diligence, and the right advisory team. Both sides need normalized EBITDA, sector-specific multiples, and business adjustments validated against comparable transactions. Timeline ranges from 60-120 days off-market to 9-18 months in a broker auction, with seller costs running $0 using a buyer-paid advisor or 6-12% with traditional brokers.

Buying and selling a business have more in common than most owners realize. Both require defensible valuation, clean deal structure, tight diligence, and the right team. The buyer needs to underwrite the business they’re acquiring; the seller needs to demonstrate the business is worth what they’re asking. This page covers the practical steps for both sides in 2026.

We’re CT Acquisitions, a buy-side M&A advisory firm. The buyer pays our fee at closing; sellers pay $0. For comprehensive coverage, see our complete buy-sell guide.

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What this guide covers

Valuation: typical multiples 4-8x EBITDA for established businesses, sector-dependent
Deal structure: asset sale most common, with 70-90% cash at close + holdback/earn-out
Financing (buyer side): SBA 7(a) for sub-$5M deals, senior debt + equity for larger
Timeline: 60-120 days off-market; 9-18 months broker auction
Cost (seller side): $0 with buyer-paid advisor; 6-12% with traditional broker
Free starting point: our 90-second valuation tool

How to value a business (both sides need this)

Whether you’re buying or selling, the valuation framework is the same:

Normalize EBITDA (add back personal expenses, owner’s above-market salary, one-time items)
Identify sector multiple range (e.g., 4.5x-8x for B2B services, 4.0x-7.5x for home services)
Apply business-specific adjustments (size, recurring revenue, owner dependency, growth, customer concentration)
Validate against recent comparable transactions

For sector-by-sector multiple ranges, see our business valuation multiplier guide. For a free 90-second sector-adjusted estimate, use our valuation tool.

Deal structure (where outcomes are decided)

The price on the LOI isn’t what you take home. Structure matters:

Asset sale vs. stock sale: 5-10% net proceeds difference for sellers (asset sales are taxed differently)
Earn-outs: 10-30% of price contingent on post-close performance, often the source of disputes
Rollover equity: 10-30% taken as continued ownership, gives seller upside if buyer grows
Escrow: 5-15% held back 12-24 months for indemnification claims
Working capital adjustment: routinely creates 6-figure post-close adjustments

Financing options (buyer side)

SBA 7(a): sub-$5M deals, 10% buyer equity, 60-120 day approval
Senior debt: 3-5x EBITDA at 7-10% rates, mid-market deals
Mezzanine: 1-2x EBITDA on top of senior, 10-13% rates
Seller financing: 10-30% of price as note paid over 3-7 years
Equity: 30-60% from PE, family offices, or search funders

The four buyer pools (who’s actually buying)

Pool	Best fit	Speed
Search funders	$500K-$3M EBITDA, owner willing to transition	90-150 days
Family offices	$1M-$15M EBITDA, long-hold capital	60-120 days
Lower-middle PE	$2M-$25M EBITDA, platform or add-on	90-150 days
Strategic acquirers	Any size with synergy	60-120 days

The advisor question

Most lower-middle-market deals need: M&A attorney ($15K-$200K), CPA ($5K-$25K), and (for sellers) some kind of M&A advisor. Three advisor models:

Traditional broker: 6-12% of sale price, paid by seller
M&A advisor: retainer + lower success fee, paid by seller, typical for $5M+ deals
Buyer-paid advisor: $0 to seller, paid by buyer at closing, like CT Acquisitions

For the deep breakdown, see our national broker alternative guide.

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How financing works for business buyers

If you’re on the buy side, the financing structure shapes how much you can pay and which businesses you can target. Five common structures:

SBA 7(a) loans (sub-$5M deals)

The Small Business Administration guarantees up to 75% of the loan, allowing community banks to lend with less stringent collateral requirements. SBA 7(a) loans go up to $5M, require 10% buyer equity (sometimes 5% with a seller note), have 10-25 year terms, and rates typically 1.5-3% above prime. The application-to-funding process takes 60-120 days. Best for owner-operator buyers who will run the business themselves.

Senior bank debt (larger deals)

Traditional commercial bank loans for buyers with stronger balance sheets. Typically 3-5x EBITDA in senior debt for service businesses, 2-4x for manufacturing. Rates depend on bank relationship and deal characteristics, currently typically 7-10% for floating-rate facilities.

Mezzanine debt

Subordinated debt filling the gap between senior debt and equity. Typical sizing: 1-2x EBITDA on top of senior debt. Rates typically 10-13%, often with warrants. Used when buyers want to stretch leverage beyond what senior banks provide.

Seller financing

The seller finances 10-30% of the purchase price as a note paid over 3-7 years. Common in SBA-backed deals (the bank often requires it) and in deals where the buyer needs help bridging the financing gap. Seller financing typically carries a rate 1-3% below market commercial rates and is usually subordinated to bank debt.

Equity (PE / family office / search funder)

For larger deals, the buyer brings 30-60% equity from PE funds, family offices, or independent sponsor capital. The advantage of a PE-backed buyer is they don’t face the same financing-contingency closing risk as an SBA buyer.

Tax considerations sellers underestimate

The price on the LOI is not what you take home. Tax treatment can move your net proceeds by 10-25% depending on structure:

Asset vs. stock sale: asset sales typically cost sellers 5-10% of proceeds in taxes versus stock sales, because depreciation recapture is taxed as ordinary income while stock sale gains get capital gains treatment
QSBS exclusion: if your business is structured as a C-corp and held for 5+ years, up to $10M of gain may be excluded from federal tax under Section 1202. This is one of the largest tax planning opportunities in M&A and is dramatically underused.
Installment sale treatment: if the seller takes a note (seller financing), tax can be paid pro rata as principal is received instead of all in year one. Useful for managing tax bracket exposure.
State tax planning: some sellers relocate to no-income-tax states (FL, TX, NV, WY, NH, SD, TN, WA) before closing. Requires planning ahead since most states require 6-12 months of residence to avoid claims.
Earn-out tax timing: earn-out payments received in future years are typically taxed as ordinary income unless structured as additional purchase price. Get this structure right at LOI, not at closing.

For the comprehensive treatment of these and the full buy-sell process, see our complete buy-sell guide.

Frequently asked questions

How do I buy or sell a business?

Both involve: (1) valuation, (2) finding the counterparty, (3) negotiating LOI, (4) diligence, (5) drafting and signing definitive agreement, (6) closing. The mechanics depend on size, sector, and structure. For comprehensive coverage, our complete buy-sell guide covers each step in detail.

How much should I pay or accept for a business?

Use the EBITDA multiple framework: identify sector range, apply business-specific adjustments, sanity-check against recent comparables. Our 90-second valuation tool applies this framework programmatically.

What’s the typical timeline?

Off-market sequential: 60-120 days. Traditional broker auction: 9-18 months. Direct buyer-seller (when parties already know each other): 30-90 days.

Do I need an advisor?

Depends on size. Sub-$500K deals often handled directly with attorneys. $500K-$25M benefits from advisors. $25M+ usually involves investment banks.

How is my business or target valued?

Most owner-operated businesses are valued on EBITDA multiple, with sector-specific ranges adjusted for business specifics. Use our valuation tool or read the multiplier framework.

What’s the cost?

For sellers: 6-12% with traditional brokers, $0 with buyer-paid advisors, plus legal/CPA fees of 1-2%. For buyers: M&A attorney + CPA + financing costs, plus advisor fee paid by buyer in buyer-paid models.