How to Sell a Small Business (2026)
Most small businesses sell for 2 to 3 times annual profit. The sale takes 6 to 9 months. Seven steps get you there, and the first one sets your price.
- Buyers multiply profit, not revenue. Your tax return understates that profit, and every dollar you add back gets multiplied.
- Six to nine months is normal. Most of it goes on finding the right buyer, not on closing.
- A broker is one route, not the only one. Brokers take 8% to 12% of the price on deals under $1 million.
What a Small Business Sells For
Size sets the price more than your trade does. These are the multiples brokers closed at in early 2026, from the IBBA Q1 2026 survey of completed deals.
| Sale price | Priced on | Typical multiple | Months to close |
|---|---|---|---|
| Under $500K | What the business pays you | 2.0x | 6 |
| $500K to $1M | What the business pays you | 2.8x | 7 |
| $1M to $2M | What the business pays you | 3.0x | 9 |
| $2M to $5M | Profit after paying a manager | 4.0x | 9 |
| $5M to $50M | Profit after paying a manager | 4.5x | 9 |
Two different profit figures sit behind that table. Under about $1 million, your own pay counts as profit. Above it, a manager’s salary comes out first.
The jump past $2 million has a cause. Smaller deals lean on the government-backed loan program, which caps at $5 million. Above that, buyers bring their own money.
Those are middle-of-the-market figures. Put your own numbers in and get a range on what your business is worth.
The Seven Steps to Sell a Small Business
- Work out what it is worth. Take last year’s profit, add back your own pay and anything personal, then multiply.
- Clean up the books. Three years of statements that match your tax returns. Anything you cannot show on a statement comes back out.
- Decide who sells it. A broker, a marketplace listing, or direct to buyers you approach yourself.
- Write the sales packet. Two or three pages on what the business does, what it earns, and why you are selling.
- Find buyers and check they can pay. Ask for proof of funds before you send your numbers out.
- Take an offer. A signed offer is not final. Price, payment terms and what happens to you after closing all sit inside it.
- Get through the books check, then close. The buyer verifies what you claimed. Then the money moves.
What to have ready before you talk to a buyer
- Three years of profit and loss statements, plus the matching tax returns
- A list of your add-backs, each one with proof
- Your lease, and written confirmation it transfers
- An equipment list with ages and condition
- The share of sales your biggest customer accounts for
Gather this before you go to market. The buyer asks for all of it anyway, and a two-week gap while you hunt for a lease is where deals cool off.
How Long It Takes to Sell
Six to nine months, start to closing. The bigger the deal, the longer it runs.
Who Buys a Small Business
Three kinds of buyer compete for small businesses, and they do not pay the same money for the same profit.
- An individual buying a job. The common buyer at the small end. They borrow against the business, so your books have to satisfy a lender as well as the buyer.
- A competitor, or a bigger company in your trade. They already run an office and a back end, so they can pay more for the same profit.
- An investor-backed group buying up shops like yours. Active wherever income repeats. They price on profit after replacing you.
Which one you end up with moves your price more than your negotiating does. BizBuySell reports closed small business sales averaging 2.7 times cash flow in 2026, which is the individual-buyer end of the market.
What Moves Your Price
Two businesses with identical profit sell for different money. These are the levers, roughly in the order buyers weigh them.
- Income that repeats. Service agreements and contracts beat one-off jobs, and the gap is worth whole turns of the multiple.
- Whether it runs without you. If the business needs you daily, the buyer is purchasing a job, and jobs price lower.
- How concentrated your customers are. One account at 40% of sales is a risk, and the buyer prices it in.
- Books a lender will accept. Most small deals need financing, so statements that match your tax returns protect your price.
What Selling Costs You
A broker takes 8% to 12% of the price on deals under $1 million. Above that the rate drops, often to 5% or 6%. The full breakdown sits on our business broker fees page.
- There is a floor. Most brokers set a minimum fee of $15,000 to $50,000, and on a small sale the minimum beats the percentage.
- The lawyer is separate. Budget $5,000 to $15,000 for the contract.
- Listing with us costs nothing. Buyers cover our fee, so the whole sale price stays yours.
On a $1 million sale, a 10% commission is $100,000. That is worth one afternoon spent working out whether you need one, so here is how a direct sale runs.
What You Keep After Tax
Most small business sales are an asset sale. The buyer takes the equipment, the customers and the name, and leaves the company itself behind.
You and the buyer split the price across those assets on IRS Form 8594. Each slice carries a different tax rate.
- Equipment you already wrote off is taxed as ordinary income, at your normal rate.
- Your reputation and customer list are taxed at the lower long-term rate. The IRS sets out the asset classes in Publication 544.
- The split is negotiated. The buyer wants more of the price in equipment. You want more of it in reputation.
Price that allocation with an accountant before you sign. It goes in the contract, and it is hard to move afterwards.
Five Mistakes That Cost Small Business Sellers Money
- Running with one buyer. A buyer who knows you have no alternative has no reason to open with their best offer. They will chip at the price later instead.
- Pricing off revenue. A shop turning over $2 million on $150,000 of profit is a $400,000 business, not a $2 million one.
- Add-backs you cannot prove. On a 3 times multiple, $20,000 of provable add-backs is worth $60,000 at closing. Unprovable ones are worth nothing.
- Telling the crew too early. Good people leave when they hear the business is for sale, and the crew is part of what the buyer is paying for.
- Waiting for a perfect year. The books you have are the books buyers price. Three ordinary clean years beat one good one.
Related Guides
- What yours is worth, with a calculator: what is my business worth.
- What the same profit fetches in your trade: business sale multiples by industry.
- Where buyers actually look: where to sell my business.
- Already been approached? What to do with an unsolicited offer.
Frequently Asked Questions
Most sell for 2 to 3 times what the business pays you in a year, salary included. Above $2 million in price it rises to 4 to 4.5 times profit, counted after a manager’s pay. Size moves the number more than your trade does.
Six to nine months from start to closing. Deals under $500,000 land nearest six months, and from $1 million up it is nine. Most of that time goes on finding a buyer who can actually pay.
Yes. Brokers charge 8% to 12% under $1 million, with a floor of $15,000 to $50,000. Selling direct keeps that money, and the work it replaces is finding and screening buyers. You still want a lawyer for the contract.
Profit, then whether the business runs without you. Expect to hand over three years of statements that match your tax returns. They also want proof of every add-back, your lease, and your biggest customer’s share of sales.
No, only on the gain, and the rate depends on what you sold. Equipment you already wrote off is taxed at your normal income rate. Your reputation and customer list are taxed at the lower long-term rate.