What Is the #1 Reason Owners Leave Money on the Table?
They start selling before they're ready. No clean financials, no documented processes, no management bench, no clear value story. Buyers see risk everywhere, and risk gets priced into a discount -- or worse, a walked deal.
The owners who get top dollar spend 6-18 months preparing before going to market. They clean up their books, reduce owner dependence, diversify their customer base, and build a clear narrative about why their business is a great investment. This preparation phase is where 80% of the value is created or destroyed.
The Cost of Rushing
According to the Exit Planning Institute, businesses that go through a formal exit preparation process sell for 50-100% more than those that don't. For a business worth $2M unprepared, that's $1M-$2M left on the table.
Read the full list: 10 Costly Mistakes Business Owners Make When Selling.
What Is the Step-by-Step Process for Selling a Business?
The typical business sale follows a 5-phase process spanning 6-12 months. Here's what to expect at each stage.
Prep & Valuation
2-8 weeks
Go-to-Market
4-10 weeks
LOI Negotiation
2-4 weeks
Due Diligence
6-12 weeks
Close
2-4 weeks
Prep & Valuation
2-8 weeks
Go-to-Market
4-10 weeks
LOI Negotiation
2-4 weeks
Due Diligence
6-12 weeks
Close
2-4 weeks
Phase 1: Preparation & Valuation (2-8 weeks)
Get a realistic valuation, clean up financials, document add-backs, prepare a Confidential Information Memorandum (CIM), and assemble your advisory team (attorney, CPA, advisor).
Phase 2: Go-to-Market (4-10 weeks)
List the business through your chosen channel (broker, advisor, or direct outreach), screen and qualify buyers, execute NDAs, and share the CIM with qualified prospects.
Phase 3: LOI Negotiation (2-4 weeks)
Receive and evaluate Letters of Intent, negotiate price, structure, contingencies, and transition terms. This is where you compare offers holistically, not just on headline price.
Phase 4: Due Diligence (6-12 weeks)
The buyer verifies everything. Financial records, customer contracts, employee agreements, legal compliance, equipment condition, and operational processes all get scrutinized.
Phase 5: Close (2-4 weeks)
Final purchase agreement, escrow setup, asset transfer, and employee communication. You get your check and begin the agreed-upon transition period.
How Do I Know If an Offer for My Business Is Fair?
The headline price is only part of the story. A $3M offer with $2M at close, a 2-year earnout, and seller financing is very different from a $2.5M all-cash offer. You need to evaluate the total deal, not just the top number.
Cash at Close
How much do you receive on day one? This is the only guaranteed money.
Deal Structure
Seller financing, earnouts, escrow holdbacks, and contingencies all affect your real proceeds.
Transition Terms
How long must you stay? What are your obligations? Is your compensation fair?
Employee Treatment
Will your team be retained? Are there layoff protections? This matters for your legacy.
Asset Sale vs. Stock Sale: What Is the Difference?
In an asset sale, the buyer purchases specific business assets (equipment, inventory, customer lists, goodwill) rather than the business entity itself. In a stock sale, the buyer purchases the owner's shares and takes over the entire entity including all liabilities.
Asset Sale
- Most common for small businesses
- Buyer gets stepped-up tax basis
- Seller may face higher tax burden
- Cleaner liability separation
Stock Sale
- Less common for smaller deals
- Easier transfer of contracts/licenses
- Seller may get capital gains treatment
- Buyer assumes all liabilities
Should I Hire a Business Broker or Sell My Business Myself?
There is no universal answer. A good broker brings a buyer network, marketing expertise, and negotiation experience. But they also charge 5-12% of the sale price and may not always have your specific interests aligned. Selling yourself saves the commission but requires significant time, expertise, and access to qualified buyers.
The Middle Path: Exit Advisor
An exit advisor (like FuturePath) helps you prepare, value, and navigate the sale process without taking a commission on the deal. You get professional guidance while maintaining control. Book a free consultation to explore your options.
Read our full comparison: Business Broker vs. Selling Yourself.
How Much Tax Will I Pay When I Sell My Business in Michigan?
Taxes are one of the most misunderstood parts of selling a business. Your tax burden depends on entity type (LLC, S-Corp, C-Corp), deal structure (asset vs. stock sale), and how the purchase price is allocated across assets.
- Federal capital gains: 15-20% depending on income, plus 3.8% Net Investment Income Tax for high earners
- Michigan state tax: 4.25% flat rate on taxable income
- Ordinary income: Portions allocated to inventory, non-compete agreements, and consulting may be taxed as ordinary income (up to 37% federal)
How Do I Keep My Business Sale Confidential?
A confidentiality breach can destroy a deal. Employees panic, customers look for alternatives, competitors circle, and suppliers tighten terms. Here's how to protect yourself.
- 1Use a blind listing that doesn't identify your business by name or exact location
- 2Require every prospective buyer to sign an NDA before receiving any identifying details
- 3Limit internal knowledge to your most trusted advisor or co-owner
- 4Communicate with buyers through a separate email and phone number
- 5Only disclose to key employees after a signed LOI with a closing timeline
Selling Your Business: FAQs
Common questions from Metro Detroit business owners about the selling process
How long does it take to sell a business in Metro Detroit?+
The typical timeline is 6-12 months from the decision to sell to closing. This includes 2-8 weeks of preparation, 4-10 weeks marketing the business, 2-4 weeks negotiating LOIs, and 6-12 weeks of due diligence. Businesses that are well-prepared (clean financials, documented processes, low owner dependence) sell faster and for higher prices.
What percentage does a business broker charge in Michigan?+
Most Michigan business brokers charge a success fee of 8-12% for businesses selling under $2M, and 5-8% for businesses in the $2M-$10M range. Some brokers also charge an upfront retainer of $5,000-$25,000. Always clarify the fee structure, what services are included, and what happens if the deal falls through before signing a listing agreement.
Should I sell my business as an asset sale or stock sale?+
Most small business sales in Michigan are structured as asset sales because they give the buyer a stepped-up tax basis (depreciation benefits) and limit liability exposure. Stock sales may be advantageous if the business has valuable contracts, licenses, or permits that can't easily be transferred. A tax advisor should model both scenarios for your specific situation.
How do I sell my business without my employees finding out?+
Confidentiality is critical. Use a blind listing that doesn't identify the business, require all prospective buyers to sign an NDA before receiving any identifying information, and limit who on your team knows about the sale. Most owners only tell key employees after a Letter of Intent is signed.
What if I get multiple offers for my business?+
Multiple offers are ideal because they create competitive tension. Compare offers not just on headline price, but on deal structure (cash at close vs. seller financing vs. earnout), contingencies, transition requirements, and how they treat your employees. The highest price is not always the best deal.
Can I sell my business and stay on as a consultant?+
Yes, and most buyers expect some transition period (typically 3-12 months). This can be structured as a consulting agreement with a defined scope, hours, and compensation. Some sellers negotiate a higher sale price in exchange for a longer transition period.
How much tax will I pay when I sell my business in Michigan?+
The tax impact depends on your deal structure, entity type, and allocation of purchase price. Federal capital gains rates range from 15-20% plus the 3.8% Net Investment Income Tax. Michigan's flat income tax rate is 4.25%. Proper tax planning before the sale can save tens or hundreds of thousands of dollars.
What are the biggest mistakes business owners make when selling?+
The top mistakes include: not preparing financials early enough, being too dependent on the owner, having customer concentration, pricing the business emotionally instead of using data, not using professional advisors, accepting the first offer without creating competition, and neglecting confidentiality. Each mistake can cost 10-30% of your business value.
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