Do I need a broker to sell a SMB?
March 02, 2025
by a searcher from Bellevue University in Houston, TX, USA
Hi everyone, my wife & I are looking to sell our home based business this year.
We built from scratch in###-###-#### The business has grown in profits each year, and now runs basically on its own but my wife still does payroll and management.
Very simple and straightforward business plus, the financial books are neatly kept.
We have 5 employees and 5 vans. My wife runs the business and looking to retire.
Asking price $1 mil.
Do we really need a broker to sell a thriving SMB? Please share your thoughts TY!
from University of Virginia in Simi Valley, CA, USA
But you must be 1) well-prepared, 2) know the rules of engagement and customs, and 3) have SMB M&A experienced tax and legal advisors.
As a buyer, I mainly consider brokered deals because they alleviate my concerns about the seller's commitment to sell. If possible, I'd prefer to avoid brokers because, in my experience, they often waste my time, and many of them are just unprofessional and inexperienced.
However, I also lack the patience and time to educate unprepared and unrealistic sellers; for example, I recently walked away from a deal with a DIY seller because they were unrealistic in their valuation expectations and very secretive with customary informational disclosures.
Here’s what I would love to see from a business seller:
- A well-written, fair MNDA to sign with prospective buyers.
- Using DocuSign or another professional e-signature system to distribute documents and collect signatures (no PII or PFS sent by email).
- Quick responses (it means you are prepared and can provide answers instantly).
- A concise and straight-to-the-point CIM with factual information. Be transparent and factual. If you wish to include projections and assumptions about the future or any other hype, do so clearly and separately from actual historical performance.
- All three (income, balance, cash flow) monthly financial statements for the last three full years and the current year’s stub period in Excel format; just a raw download from your accounting system (perhaps QBO in your case).
- If there are any adjustments, provide them separately, along with explanations and justifications. - Annual revenue composition by clients for the last three years (client concentration over time).
- A/R aging.
- Describe your employees, succession plan, talent pipeline, etc.
- Importantly, be very specific and transparent about what you and your spouse do for the business so a prospective buyer can determine whether they can replace you both or need to hire someone besides working themselves.
If you have any questions or need further advice, feel free to send me a direct message.
from Columbia University in Charlotte, NC, USA
We received 100 NDAs from strategics, PE, searches and family offices, received 8 offers for up to 7x EBITDA. We signed a LOI on Tuesday with 80% cash upfront and an equity roll into a platform that could 3-5x over 3-5 years.
Email me at redacted if you'd like to learn more.