What do I Need to Sell my Business?

Preparation is an essential part of selling your business. Before you start searching for offers, consider creating a small business transition plan or succession plan.  To prepare your business for change, you should gather the following information:

  • Financial records
  • Tax records
  • Legal documents (contracts, agreements, etc.)
  • Relevant client information
  • Business operation records (inventory, organization structures, systems used, etc.)

Selling your business can take anywhere from several months to several years. The best way to make the process go faster is by having all the above documents prepared along with having an adequate team of advisors who can assist in addressing questions, help with documentation and can limit the amount of speed bumps you encounter along the way.

Succession Planning Considerations

When asking yourself when should I sell my business, there are a variety of different succession planning considerations for business owners.

Plan Early

Creating a business succession plan takes time. By planning early, you can ensure a more seamless transition. This is done by identifying a successor and creating a buy-sell strategy.

Identify the Successor

You may already have someone in mind to continue running your business but it’s important to work with them before you leave to ensure an easy transition and to help the business continue to run successfully. Sometimes there may not be a clear successor, in which case you should interview potential candidates and assess their capabilities.


After a decision has been made, it’s important to let key stakeholders know what the transition plan is going to look like and continue working with the successor as you prepare to leave.


Having a succession plan means more than finding the right person, it also includes reviewing your financials to consider the best way to minimize your tax burden and how to manage debt.

Selling Your Business Outright

If your family has no interest in taking over the business, an outright sale is likely the easiest way to remove yourself from the business. Start by getting your financials in order and consult with a team of advisors to help facilitate the transaction. Many times, you can sell the business and continue to stay as an employee if you’re still wanting to work. This also benefits the buyer to have you around to facilitate the relationships with clients and vendors.

Transferring Your Business with a Buy-Sell Agreement

Transferring your business with a buy-sell agreement allows you to sell your portion of the business to an appointed individual at a set price with a legally binding contract. By selling your business, you can avoid future issues that may come up such as business liquidation or disruption to operations.  

Private Annuity

With private annuity you can transfer your portion of ownership in the business to family members or buyers. In turn, the buyer will make payments to you throughout the rest of your life. By selling your business as a private annuity, this allows you to avoid gift or estate taxes since assets are being removed from your estate.

If you’re considering a private annuity, be sure to talk to a tax professional.

Self-Canceling Installment Note

An installment note is a promissory note (proof of debt). This is the process of selling a business to a family member or buyer with a note that upon the seller’s death, the payments to the seller for the purchase of the business ceases. Often this is done when an older family member or ailing family member would like to pass the business along to a family member and the installment note is written for a shorter time period than the seller’s life expectancy. This allows the seller to quickly sell the business and avoid incurring gift and estate tax consequences.

Gifting Your Business

There has never been a better time to gift your business. Ideally, you want to gift your business to a family member when the value is at its lowest to be below the lifetime gift tax exemption. By gifting your business under the tax exemption amount, any growth to the business occurred after the transfer is non-taxable to your estate. COVID-19 has especially hit small business hard with inflation and a decline in projected revenue. Before the scale rebalances itself, consider gifting your business now.


Contact an Advisor

Business planning is a personal and complex process that requires teams of professionals and a thoughtful approach. If you’d like to talk with a financial advisor about starting this process or what this would entail, a Farm Bureau advisor is here for you.

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