How to Sell My Small Business: A First-Time Seller’s Playbook for Sub-$2M EBITDA Owners (2026)

“How do I sell my small business?” is one of the most common owner questions and one of the worst-served by generic M&A content. Most articles either describe enterprise-scale processes that don’t apply at sub-$2M EBITDA, or they describe Main Street business broker processes that leave money on the table for owners with real cash flow. Neither serves a first-time seller of a $500K-$2M EBITDA business well.

This guide is written for that owner specifically. The owner who built a profitable HVAC, manufacturing, distribution, professional services, or specialty business between $500K and $2M in SDE/EBITDA. Old enough to have real customers, real systems, and real defensibility. Small enough that the playbooks for $10M+ deals don’t fit. New enough to selling that you want to know what to expect at every step instead of being surprised.

The framework comes from CT Acquisitions’ direct work with 76 active U.S. lower middle market buyers and the smaller-deal flow that crosses our desk. We’re a buy-side partner. The buyers pay us when a deal closes — not you. That includes search funders, family offices, lower middle-market PE add-on programs, individual operator buyers, and strategic acquirers including direct mandates with the largest consolidators in home services. Some of the businesses we see are $5M+ EBITDA. Many are smaller. The playbook below is what we wish every first-time seller knew before they started talking to brokers.

One framing note before you start. “Small business” in this guide means $500K-$2M EBITDA or SDE. Below $500K SDE you’re in business broker / SBA-financed Main Street territory with different dynamics. Above $2M EBITDA you’re entering true LMM territory where platform PE and family offices compete and the playbook shifts again. The middle band — $500K-$2M — is where most first-time sellers live and where the advice is most uneven.

“Most first-time sellers of sub-$2M EBITDA businesses don’t lose money on price — they lose money on process. They use the wrong advisor, target the wrong buyer pool, accept the first LOI without negotiating, and pay 10% commission to a broker who introduced them to a buyer they could have found themselves. Knowing the process is the leverage.”

Key Takeaways

• Your buyer pool is search funders, individual operators, family buyers, and PE add-on programs — not platform PE. Each runs a different process.
• Sub-$2M businesses are valued on SDE (which adds back owner comp) at typical multiples of 2.5x-4x, not EBITDA at 5x-8x.
• The 6-step process: prep (3-6 months), find buyers, qualify, sign LOI, survive diligence, close. Total timeline 8-15 months.
• The single biggest valuation lever is removing owner-dependency. A business that runs without you is worth 1.5-2x more than the same financials with you as the operating brain.
• Sell-side broker commissions of 8-12% are a meaningful percentage of net proceeds at this size. Evaluate broker, direct, marketplace, and buy-side partner paths intentionally.
• First-timer mistakes that cost the most: signing exclusivity too early, accepting the first LOI without negotiating, hiding owner-add-backs, and not running a sell-side QoE on a $1M+ EBITDA business.

How selling a small business is different from selling a larger one

The first thing to internalize is that the playbooks for $20M EBITDA companies don’t scale down cleanly. The buyer pool is different. The valuation method is different. The advisor cost structure is different. The diligence depth is different. The post-close transition is different. Treating your $1.5M EBITDA business like a miniature version of a $20M EBITDA business is how first-timers end up frustrated, overpriced, and unsold.

Buyer pool: yours skews toward individuals and small funds, not platform PE. Larger LMM businesses attract platform PE buyers, family offices, and strategic acquirers with full M&A teams. Sub-$2M EBITDA businesses primarily attract search funders (individuals raising committed capital to buy and run one company), independent sponsors (deal-by-deal capital raisers), PE add-on programs (existing platforms that bolt small companies onto bigger ones), and individual operator buyers (corporate refugees, immigrant entrepreneurs, second-career operators).

Valuation: SDE replaces EBITDA as the primary metric. EBITDA assumes a buyer is replacing the owner with a hired GM/operator at market salary. SDE recognizes that a small-business buyer is buying a job plus cash flow — so the owner’s salary, benefits, and reasonable personal expenses get added back into the cash-flow number the multiple is applied to. The same business with $700K of EBITDA might have $1.1M of SDE if the owner pulls $300K salary plus $100K of personal-expense add-backs.

Multiples are lower in absolute terms but the math still works out. An $800K SDE business at 3.5x = $2.8M sale price. The same $800K of EBITDA in a true LMM context (i.e., assumes a $300K hired GM, leaving $500K of EBITDA after replacement) at 6x = $3M. Different methods, comparable answers. What changes most is the buyer pool you’re marketing to, not the underlying value of the business.

Advisor cost structure: the math works against full sell-side broker engagement at this size. A sell-side broker charging 10% on a $2.5M sale = $250K. That’s 10% of the buyer’s total purchase price and a much larger percentage of your net proceeds after taxes and transaction costs. At $20M deal sizes the same percentage feels different because the absolute dollars compare differently to the proceeds. At sub-$2M EBITDA, the broker math should be evaluated, not assumed.

Diligence and transition: shorter and less formal than larger deals. Sub-$2M EBITDA deals don’t typically require a $50K QoE — though for businesses over $1M in cash flow, sell-side QoE often pays for itself. Diligence focuses on confirming customer relationships, owner add-backs, and operational reality. Transition periods tend to be 6-18 months rather than 24-36.

Who actually buys small businesses in 2026: the four buyer archetypes

Knowing your buyer is the foundation of every other decision. It dictates the price you can get, the deal structure to expect, the transition you’ll commit to, and the process that fits. Most first-time sellers either don’t know who their buyer is or assume it’s “PE” generically — which leads to running the wrong process and missing the buyers who would actually pay the most.

Search funders (individuals with committed capital). These are operators — usually MBAs, second-career executives, or experienced operators — who have raised search capital and committed equity to buy and run one business. They’re looking for $1M-$3M of EBITDA/SDE typically, want to take operational ownership immediately, and value businesses with strong management depth or industries they have experience in. They’ll pay competitive multiples (often 3.5x-5x SDE) because they’re buying a job plus an asset, not just an asset.

PE add-on programs. Existing PE-backed platforms that buy smaller companies and bolt them onto a bigger entity. Pricing logic is different from a standalone sale: the platform values your business based on what it’s worth as part of their bigger business after synergies, which can be higher than a standalone valuation. Multiples can be at or above standalone-LMM ranges if your business is genuinely accretive. Process is faster and more professional than search funder transactions because the platform has done it before.

Family offices and individual investors. Family-backed capital looking for long-term holds, often in specific industries the family knows. Less price-aggressive on the front end than search funders or PE add-ons, but more flexible on structure (longer holds, more tolerance for owner-stay arrangements, willing to look at deals other buyers reject). Family offices are great fits for owners who want a relationship-driven transition over 24-36 months.

Individual operator buyers. Corporate refugees, immigrant entrepreneurs, second-career operators buying with SBA financing or self-funded equity. These buyers often pay slightly less than search funders or PE add-ons in headline price, but have the lowest barriers to closing for very small deals (under $1M SDE). SBA-financed deals also enable longer payment structures (10-year amortizing notes) that can be tax-favorable for sellers.

What this means for your process. If your business is $700K SDE in a niche industry, individual operators or search funders are your most likely buyers — and you should design your process around them. If your business is $1.5M SDE in an industry with active PE roll-up (HVAC, electrical, plumbing, distribution), PE add-on programs may be your best price — and you should design your process around platform conversations. Mixing the playbooks wastes everyone’s time.

Buyer archetype	Typical SDE/EBITDA range	Multiple range	Transition expectation
Search funders	$1M-$3M SDE	3.5x-5x SDE	Clean exit at close or 3-6 mo transition
PE add-on programs	$1M-$5M EBITDA	Platform-value (often 5x-7x equivalent)	12-24 mo transition typical
Family offices	$500K-$5M EBITDA	3x-5x SDE / 4x-6x EBITDA	24-36 mo flexible
Individual operators (SBA-financed)	$300K-$1.5M SDE	2.5x-4x SDE	6-18 mo training and transition
Strategic acquirers	Varies	Premium if synergies real	12-36 mo, customer-relationship driven
Sub-$500K SDE / Main Street brokers	Under $500K SDE	1.5x-3x SDE	3-12 mo, often SBA-financed

Step 1: Prepare the business (3-6 months before going to market)

The single highest-ROI work you can do is preparation. Owners who skip prep go to market faster and receive 60-75% of what their business is worth. Owners who spend 3-6 months on prep go to market with confidence, defend their price, and frequently end up with multiple competing offers. The prep work below is the highest-leverage time investment in the entire process.

Clean up the financials. Move to monthly closes within 10 business days. Get reviewed (not just compiled) financials for the trailing 24 months. Identify and document every owner add-back (personal vehicles, family payroll, country club, travel, health insurance) so you can defend the SDE number. If your business is over $1M SDE/EBITDA with material add-backs, run a sell-side QoE 3-6 months pre-market — a $15K-$30K investment that prevents 5-10% downward re-trades during buyer diligence.

Document the operations. Buyers underwrite based on whether the business can run without you. Write down the things you do that nobody else does. Document key customer relationships in CRM. Document vendor relationships. Document the operational rhythm (Monday meetings, weekly closes, customer-touch cadence). Build a simple operations manual covering pricing, sales process, customer service, vendor management, hiring.

Reduce owner-dependency before going to market. If you’re the key relationship for over 40% of customers, start introducing your operations manager or sales lead to those accounts now. If you’re the only person who can close a sale, train someone. If your business can’t survive a 30-day vacation today, work on it for 3-6 months until it can. This single change is often worth 0.5x-1x SDE in valuation.

Lock in customer relationships. If your top customers are on month-to-month or 1-year contracts, negotiate longer terms with auto-renewal where possible. Even moving from 1-year to 2-year contracts with auto-renewal materially reduces buyer perceived risk. Consider intentional diversification if any single customer is over 30% of revenue.

Get personal financial planning done. Model after-tax proceeds in your specific state and structure. A $2.5M sale typically puts $1.6M-$2M in your account depending on basis, state, structure. Make sure the math works for your retirement plan. If it doesn’t, the answer might be growing the business another 1-2 years rather than going to market.

Step 2: Determine your asking price (use SDE, not EBITDA)

SDE is the cash flow metric for small businesses. It starts with EBITDA (earnings before interest, tax, depreciation, amortization) and adds back the owner’s reasonable salary, benefits, and personal expenses run through the business. The logic: a small-business buyer is buying both an asset and a job, so the cash flow available to them includes what the seller was taking out as comp plus benefits.

Computing your real SDE. Start with last 12 months of operating profit. Add back: owner’s W-2 salary and bonus, owner’s health insurance and benefits, owner’s personal expenses (vehicle, phone, travel that’s not strictly business), one-time non-recurring expenses (legal settlement, equipment write-off). Subtract: any genuine business expense that was missed in books. The resulting number is your defensible SDE — and the basis for your asking price.

Multiple ranges for sub-$2M SDE businesses in 2026. Industry-dependent, but typical ranges: HVAC, plumbing, and home services with strong recurring revenue: 3.5x-5x SDE. Manufacturing and specialty distribution: 3x-4.5x SDE. Professional services with light asset base: 2.5x-3.5x SDE. B2B service businesses with concentration risk: 2.5x-3.5x SDE. Restaurants and consumer-discretionary: 1.5x-2.5x SDE. The same SDE in different industries leads to materially different asking prices.

Adjustments that move you up or down the multiple range. Up: documented growth (5-15% YoY), low customer concentration (no customer over 15%), strong management depth (you can take 30-day vacations), recurring/contracted revenue (over 50%), clean reviewed financials. Down: customer concentration (one customer over 30% drops you a half-multiple), declining revenue (any decline often costs you a full multiple), owner-dependency (you’re the only person who can close sales), comingled financials, no recurring revenue.

Set your asking price slightly above your target, with room to negotiate. If your honest target is $2.5M, set asking at $2.7M-$2.9M. Most first-time sellers either anchor too high (asking $4M for a business worth $2.5M and getting no traction) or too low (asking $2.3M and accepting $2.1M when the right price was $2.7M). The right asking price gets you 3-7 serious conversations, gives you something to negotiate down from, and signals professionalism rather than desperation.

Step 3: Decide your go-to-market path (broker, direct, marketplace, or buy-side partner)

There are four paths to market for a sub-$2M EBITDA business, each with different tradeoffs. Most first-time sellers default to a sell-side business broker without seriously evaluating the others — which often costs them 10% of the deal value in commission for services they may not need.

Path 1: Sell-side business broker. The traditional path. Broker charges 8-12% commission (usually with a $50K-$150K minimum), runs a 6-12 month listing process, markets to their buyer network plus public marketplaces. Best when: you don’t want to manage the process, you have no existing buyer relationships, and you have time. Worst when: you have a known buyer interested already, your business is highly specialized (broker won’t know the right buyers), or the commission percentage is meaningfully large compared to your net proceeds.

Path 2: Direct sale to a known buyer. Sometimes the right buyer already exists in your orbit — a competitor, a customer, a vendor, a former employee, a family member, or someone you met at an industry event who said ‘if you ever want to sell, call me.’ Direct sales avoid commission entirely and can close fast. Best when: the buyer is already qualified and motivated. Worst when: you’re negotiating against an experienced buyer with no advisor on your side — you’ll often leave 10-25% on the table without knowing it.

Path 3: Online marketplace listing. BizBuySell, Axial, and similar platforms let you list publicly and attract individual operator buyers and small search funders. Lower fees (often $50-$200/month plus a small success fee or none at all). Best when: your business is in the $300K-$1M SDE range, you want to reach individual operators, and you’re willing to handle inbound inquiries yourself. Worst when: confidentiality matters (public listings are visible to competitors and employees), or your buyer pool is sophisticated PE add-on programs that don’t shop on marketplaces.

Path 4: Buy-side partner (the path most first-time sellers don’t know exists). Buy-side partners work directly with PE firms, family offices, search funders, and strategic acquirers who have committed capital and active mandates. The buyer pays the partner a fee on close — the seller pays nothing. Best when: your business is $1M+ SDE/EBITDA in an industry with active PE or strategic interest. Worst when: your business is below $500K SDE or in a niche with thin institutional buyer interest.

How to choose between the four paths. Three honest questions. (1) Do you know your buyer already? If yes, lean direct. (2) Is your buyer pool institutional (PE, search funders, family offices) or individual (operators, SBA buyers)? Institutional pool favors buy-side partners; individual pool favors marketplaces and brokers. (3) How much do you value your time? Brokers and buy-side partners both manage process for you; direct and marketplace require more time investment.

Step 4: Find buyers and qualify them

Once you’ve picked your path, the next step is generating buyer conversations. The goal isn’t to find one buyer — it’s to find 5-10 qualified, interested parties so you have leverage. Owners who go to market with one buyer almost always get squeezed on price; owners with 5-10 conversations have negotiation leverage even if only 2-3 ultimately make offers.

What ‘qualified’ means in practice. A qualified buyer has three things: capital (committed equity, debt commitment, or strategic balance sheet), intent (specific industry mandate, active deal pipeline, demonstrable seriousness), and timeline alignment (ready to move in your timeframe, not ‘maybe in two years’). Ask buyers directly: how is the deal financed? What other deals are you actively pursuing? When could you close if we agreed on terms?

The information packet you give buyers (the ‘teaser’ and CIM). A 1-2 page anonymous teaser describing the business at a high level (industry, size, geography, revenue, SDE, growth) without naming the company. Buyers who sign an NDA receive the Confidential Information Memorandum (CIM) — 15-30 pages with detailed financials, customer mix, employee structure, operations description, growth opportunities, and reasons for sale. For sub-$2M EBITDA businesses, the CIM doesn’t need to be Wall Street-grade — honest, specific, and accurate beats slick and vague.

NDA enforcement actually matters at this size. Sub-$2M EBITDA businesses are particularly vulnerable to information leaks because employees, customers, and competitors are all close to the business. Use NDAs that include non-solicitation provisions (buyers can’t hire your employees if the deal doesn’t close) and customer-protection provisions (buyers can’t approach your customers). Don’t share the CIM until NDA is signed and you’ve confirmed the buyer’s identity and capital.

Qualifying conversations: ask the right questions early. Within the first 30-60 minutes with any buyer, learn: their typical deal size and structure, their experience with your industry, their funding source, the typical timeline from LOI to close, what they look for in management transitions, and any deal-killers in their criteria. If a buyer can’t answer these confidently, they’re probably not qualified for your deal.

Common first-timer mistake: spending time on tire-kickers. Most owners spend disproportionate time on the buyer who shows up first or seems most enthusiastic. Qualified, professional buyers tend to ask harder questions and seem less ‘in love’ with the business. Tire-kickers are enthusiastic and easy — until it’s time to put up money.

Step 5: Negotiate and sign the LOI (Letter of Intent)

The LOI is the most important document in the entire process. It locks in price, structure, and exclusivity for 60-120 days while the buyer does diligence and negotiates the definitive purchase agreement. Mistakes made in the LOI are extremely hard to fix later because the buyer has leverage as exclusivity progresses.

What goes in the LOI. Purchase price (specific dollar number, not a range). Deal structure (asset sale vs stock sale — tax implications differ materially). Working capital target. Earnout structure if any (specific KPIs, measurement period, dispute resolution). Seller financing or rollover equity if any. Exclusivity period. Conditions to close (financing, diligence, regulatory). Reps and warranties framework. Transition period and consulting agreement terms. Closing timeline.

Negotiate exclusivity carefully. Buyers want long exclusivity (90-120 days) to fully diligence without competitive pressure. Sellers want short exclusivity (30-60 days) to keep options open. The right answer depends on your buyer pool, but as a first-time seller, push for 60-75 days with extension only by mutual agreement. Avoid ‘automatic extension if buyer is acting in good faith’ clauses — they’re extremely hard to enforce.

Watch the structure, not just the headline price. A $3M deal with $2M cash at close, $500K seller note, and $500K earnout is materially different from a $3M all-cash deal at close. The $2.6M all-cash offer might be better than the $3M structured offer once you risk-adjust. First-time sellers often anchor on the headline number and miss that 30-50% of the value is contingent or deferred.

Working capital target is the most-overlooked LOI term. Working capital (current assets minus current liabilities) is what stays in the business at close. The LOI specifies a target; if working capital at close is below target, the buyer reduces purchase price; if above, you may get a small bump. First-time sellers often agree to a working capital target without modeling it and end up surprised at close. Run the numbers honestly — or get an advisor to.

Get an attorney before you sign. Even at sub-$2M deal sizes, an M&A attorney for $5K-$15K to review the LOI is the cheapest insurance you’ll buy. They’ll catch language that costs you money post-close, terms that limit your flexibility, and structural choices that have meaningful tax implications. Don’t use your general business attorney unless they have specific M&A experience — this is specialty work.

Step 6: Survive due diligence

Diligence is the period between LOI signing and close where the buyer verifies everything you’ve told them. For sub-$2M EBITDA deals, diligence typically takes 45-90 days and covers financial review, legal review, customer/vendor verification, operations review, and employee analysis. Most deals that fall apart fall apart during diligence — not because the deal was bad but because surprises emerged.

Financial diligence: what buyers actually look at. Trailing 24-36 months of financials. Verification of every owner add-back. Customer-level revenue analysis (concentration, retention, contract terms). Margin analysis by product/service line. Working capital trends. Cash conversion cycle. Quality of earnings — whether reported EBITDA reflects sustainable cash flow or includes one-time items. If you ran a sell-side QoE during prep, this is where it pays off — buyers re-validate your work rather than discovering issues.

Legal diligence: contracts, IP, and corporate hygiene. Review of all material contracts (customer, vendor, employee, lease, IP). Verification of corporate good standing in all states of operation. Review of any litigation or regulatory issues. IP ownership clarity (who owns what was created by employees or contractors). Lease and real estate review. Most legal diligence surprises come from informal arrangements that were never properly documented — key employees without employment agreements, key customers on handshake deals, IP created by contractors without proper assignments.

Operational diligence: does the business work as described? Buyer or buyer’s operating partner spends time in the business. Reviews systems and processes. Talks to key managers (with seller’s permission). Validates customer relationships through reference calls if appropriate. Verifies physical assets and inventory. The operational review can either reinforce confidence or surface concerns — honest documentation during prep helps it go smoothly.

Re-trades: what they are and how to prevent them. A re-trade is when the buyer reduces the LOI price during diligence based on something they discovered. Common re-trade triggers: lower-than-expected customer retention, owner add-backs that don’t hold up, working capital below target, undisclosed liabilities, key-employee concerns. The best prevention is honest documentation during prep — if you disclosed an issue upfront and priced for it, it can’t be a re-trade trigger. Re-trades that emerge from things you should have disclosed often kill deals entirely.

Manage diligence timeline actively. Diligence has a tendency to slow down as it progresses. Buyers find new things to verify. Their attorneys want more documents. Their accountants want one more reconciliation. Without active management, 60-day diligence becomes 120-day diligence and your exclusivity expires with no progress. Build a tracker of every open diligence item with target dates, push the buyer’s team weekly, and don’t agree to extend exclusivity without specific milestones.

Step 7: Close and transition

Close is the formal legal completion of the sale. Definitive purchase agreement signed by all parties. Funds wired to seller. Stock or assets transferred. Legal possession of the business changes hands. For sub-$2M deals, closing day is usually 1-2 hours of signing documents and a wire confirmation — the work was already done in diligence.

Working capital true-up: the post-close adjustment. Most deals include a working capital adjustment 60-90 days post-close. The closing balance sheet is reconciled against the working capital target from the LOI; if working capital was below target, the seller refunds the difference; if above, the seller gets paid more. This is a common source of post-close disputes — track every dollar carefully and have an attorney review the calculation methodology before close.

Transition period: the seller’s post-close commitment. Most sub-$2M deals include a transition period of 6-18 months where the seller stays in some role to introduce customers, train operators, and ensure continuity. The transition is usually paid (consulting agreement at modest hourly or fixed monthly rate) and includes specific deliverables. First-timer mistake: agreeing to a vague ‘reasonable transition support’ in the LOI without defining hours, deliverables, or duration. Specificity protects both sides.

Earnout management: if your deal includes one. Earnouts (purchase price contingent on post-close performance) are common in sub-$2M deals where buyers want to share risk. Earnouts measured on revenue are usually safer for sellers than EBITDA-based earnouts, because the buyer controls operating decisions post-close that affect EBITDA. Make sure the earnout structure has clear KPI definitions, measurement methodology, and dispute resolution. Track every metric monthly post-close.

Tell employees and customers professionally. Most deals require seller and buyer to coordinate on the announcement to employees and customers. Don’t announce until the day of close (or the day after). Have a coordinated message. The buyer should be visible to employees from day one to establish credibility. Customer communications should reassure continuity and introduce the new ownership. Done well, the announcement strengthens the business; done poorly, it triggers employee departures and customer churn.

Common first-timer mistakes that cost real money

Mistake 1: hiding owner add-backs. First-time sellers sometimes try to hide personal expenses run through the business because they’re embarrassed or worried about taxes. Buyers find them anyway during diligence — and now they’re a credibility problem instead of a defensible add-back. Document every add-back honestly upfront. Sophisticated buyers expect them; hiding them creates more risk than the add-back was worth.

Mistake 2: signing exclusivity too early or too long. Buyers ask for 90-120 day exclusivity in the LOI. Sellers should counter with 60-75 days and require mutual agreement to extend. Long exclusivity gives the buyer leverage to slow-roll diligence and re-trade you in month 3 when you have no other options. Shorter exclusivity with milestones keeps the buyer accountable.

Mistake 3: accepting the first LOI without negotiating. First-time sellers, particularly those with one buyer at the table, often accept the first LOI close to the asking price because they’re relieved someone is interested. The first LOI is almost never the buyer’s best offer — they’re testing what you’ll accept. Negotiate at minimum price, exclusivity duration, working capital target, earnout structure, and transition period.

Mistake 4: not running a sell-side QoE on a $1M+ EBITDA business. For businesses over $1M in cash flow with material add-backs, sell-side QoE costs $15K-$30K and prevents 5-10% downward re-trades during buyer diligence. The math is simple: if your deal is $3M, a 5% re-trade is $150K. The QoE pays for itself 5-10x in prevented re-trades.

Mistake 5: not having an M&A attorney. General business attorneys handle business formations, contracts, and routine litigation. M&A is specialty work. The cost difference is small ($5K-$15K extra) and the value is enormous — M&A attorneys catch language and structure that costs sellers money post-close. Use a specialist.

Mistake 6: telling employees too early. Employees who hear ‘we might be selling’ before there’s a specific buyer and timeline often start looking for new jobs. Customers who hear it often start hedging. Sometimes both. The right time to tell employees is when an LOI is signed and a transition plan exists — not earlier. Even key employees should typically be informed only when retention agreements are in place.

Mistake 7: assuming all buyers are interchangeable. Search funders, PE add-on programs, individual operator buyers, and strategic acquirers pay different prices, structure deals differently, and require different transitions. Picking the wrong path wastes 6 months and leaves money on the table.

How long should this take, and what does the timeline look like?

First-time sellers consistently underestimate timeline. The full process from ‘decide to sell’ to ‘funds in account’ typically takes 8-15 months for a sub-$2M EBITDA business. Owners who try to compress that into 3-6 months either accept significant price discounts or fail to close at all.

Months 1-3: prep work. Clean financials. Document operations. Reduce owner-dependency. Lock in customer contracts. Run sell-side QoE if appropriate. Get tax and personal financial planning done. Choose go-to-market path. Engage M&A attorney.

Months 3-6: market and find buyers. Prepare teaser and CIM. Reach out to buyers (or work with broker / buy-side partner who does). NDA execution. CIM distribution. Initial buyer conversations and Q&A. Management presentations. Site visits. Generate 5-10 qualified buyer conversations and 2-4 LOIs.

Months 6-9: LOI negotiation and exclusive diligence. Negotiate LOI terms with the strongest 1-2 buyers. Sign LOI with chosen buyer. 45-90 day diligence period with financial, legal, operational, and management review. Definitive purchase agreement negotiation. Resolution of any re-trades or open issues.

Months 9-12: close and immediate post-close. Final document review and signing. Close. Funds wire. Employee and customer announcements. Begin transition period. Working capital true-up calculations. Initial earnout tracking if applicable.

Months 12-15+: transition completion. Continued transition support. Customer relationship handoff. Earnout measurement and payments. Working capital true-up payment.

What can speed it up: knowing your buyer in advance. If you already know your buyer, the ‘find buyers’ phase compresses or disappears entirely — and the process moves from 8-15 months to 4-7 months. This is one reason buy-side partners with pre-qualified buyer lists move materially faster than sell-side broker auctions.

Conclusion

How do you sell your small business? You prepare for 3-6 months. You determine the right asking price using SDE, not EBITDA. You pick the right go-to-market path for your specific buyer pool. You generate 5-10 qualified conversations rather than rushing into the first one. You negotiate the LOI carefully, particularly around exclusivity, working capital, and structure. You survive diligence with honest documentation. You close, transition, and protect your earnout. The process takes 8-15 months end to end, and the highest-leverage time investment is the prep work in months 1-3. First-time sellers who skip prep don’t move faster — they just sell for less. The owners who get the best outcomes know who their buyer is, run a deliberate process, and get advice from people who know the buyer pool. If you want to talk to someone who knows the buyers personally instead of running a generic auction, we’re a buy-side partner — the buyers pay us, not you, no contract required.

Frequently Asked Questions

What’s a small business in M&A terms?

Generally $500K-$2M in SDE/EBITDA. Below $500K SDE you’re in Main Street business broker / SBA-financed territory with different dynamics. Above $2M EBITDA you start entering true LMM territory with platform PE and family office competition. The middle band — $500K-$2M — is where most first-time sellers live.

What’s the difference between SDE and EBITDA when selling a small business?

SDE (Seller’s Discretionary Earnings) starts with EBITDA and adds back the owner’s salary, benefits, and reasonable personal expenses run through the business. The logic: small-business buyers are buying both an asset and a job, so the cash flow available to them includes the owner’s comp. The same business with $700K of EBITDA might have $1.1M of SDE if the owner pulls $300K salary plus $100K of personal-expense add-backs. Multiples for sub-$2M businesses are typically expressed in SDE (2.5x-4x) rather than EBITDA.

Should I use a business broker to sell my small business?

It depends on your buyer pool and your time. Sell-side brokers charge 8-12% commission with $50K-$150K minimums and run 6-12 month auction processes. Best when: you don’t want to manage the process and have no existing buyer relationships. Worst when: you have a known buyer already, your business is highly specialized, or the commission is a meaningful percentage of net proceeds. Alternatives include direct sale, online marketplace listing, and buy-side partners (where the buyer pays the fee). Evaluate all four paths intentionally.

How long does it take to sell a small business?

Most first-time sellers take 8-15 months from decision to close. Roughly 3-6 months of prep work (cleaning financials, documenting operations, reducing owner-dependency), 3-6 months to market the business and find qualified buyers, and 3-4 months for LOI negotiation, diligence, and close. Knowing your buyer in advance can compress the timeline to 4-7 months.

What multiple of SDE will my small business sell for?

Industry-dependent. Typical 2026 ranges: HVAC, plumbing, and home services with strong recurring revenue: 3.5x-5x SDE. Manufacturing and specialty distribution: 3x-4.5x SDE. Professional services with light asset base: 2.5x-3.5x SDE. B2B services with concentration risk: 2.5x-3.5x SDE. Restaurants and consumer-discretionary: 1.5x-2.5x SDE. Adjustments up: documented growth, low customer concentration, management depth, recurring revenue. Adjustments down: customer concentration, decline, owner-dependency, comingled financials.

Who are the typical buyers for a sub-$2M EBITDA business?

Four main archetypes. Search funders (individuals with committed capital seeking $1M-$3M SDE businesses). PE add-on programs (existing platforms bolting on smaller companies). Family offices (long-term holders, flexible structures). Individual operator buyers (corporate refugees, second-career operators, often SBA-financed). Each pays differently and runs different processes — knowing which fits your business shapes your entire go-to-market approach.

What’s the most common first-timer mistake when selling a small business?

Hiding owner add-backs out of embarrassment or tax concern. Buyers find them in diligence anyway, and now they’re a credibility issue instead of a defensible add-back. Document every add-back honestly upfront. Sophisticated buyers expect them; hiding them creates more risk than the add-back was worth.

Do I need an attorney to sell my small business?

Yes — specifically an M&A attorney, not a general business attorney. Cost: $5K-$15K for LOI review and definitive agreement work. Value: catching language and structure that costs you money post-close. M&A is specialty work. Your general business attorney probably hasn’t done enough deals to spot the issues that matter.

What is sell-side QoE and do I need one?

Quality of Earnings is a third-party financial review that validates your reported SDE/EBITDA against buyer-grade scrutiny. Sell-side QoE means you commission it before going to market, rather than waiting for the buyer to commission their own. For businesses over $1M SDE/EBITDA with material add-backs, it costs $15K-$30K and typically prevents 5-10% downward re-trades during buyer diligence. The math usually pays back 5-10x. Below $1M SDE, often not necessary.

Should I tell my employees I’m thinking about selling?

Not until an LOI is signed and a transition plan exists. Premature disclosure damages morale, customer confidence, and competitive position. Even key employees should typically be informed only after LOI, with retention agreements in place. The exception: if you have a formal employee partnership (ESOP-eligible), you may need to involve them earlier.

How much will I net after taxes when I sell my small business?

Highly state- and structure-dependent. A $2.5M sale typically nets $1.6M-$2M after federal capital gains, state taxes, and transaction costs. Federal capital gains: 0%/15%/20% based on income. State varies dramatically (California 13.3%, Texas/Florida 0%). Asset sale vs stock sale tax treatment differs. Section 1202 QSBS exclusion (up to $10M tax-free for qualifying small businesses) can be huge. Run the tax analysis with your CPA before deciding to sell.

What happens during due diligence when selling a small business?

45-90 days where the buyer verifies everything you’ve told them. Financial review (validating SDE, owner add-backs, customer concentration, working capital trends). Legal review (contracts, IP, corporate good standing, litigation). Operational review (systems, processes, key managers, physical assets). Customer/vendor verification. Most deals that fall apart fall apart in diligence — usually because of surprises that should have been disclosed upfront.

How is CT Acquisitions different from a sell-side broker or M&A advisor?

We’re a buy-side partner, not a sell-side broker. Sell-side brokers represent you and charge you 8-12% of the deal (often $300K-$1M) plus monthly retainers, run a 9-12 month auction process, and require 12-month exclusivity. We work directly with 76+ buyers — search funders, family offices, lower middle-market PE, and strategic consolidators — who pay us when a deal closes. You pay nothing. No retainer, no exclusivity, no contract until a buyer is at the closing table. You can walk after the discovery call with zero hooks. We move faster (60-120 days from intro to close) because we already know who the right buyer is rather than running an auction to find one.