When I decided I needed to leave my company, one of the reasons I chose to sell instead of shutting it down was that it was the bigger risk.

In 2022, my mantra was “take more swings” and working to sell my company was my biggest swing yet.

I had no idea what the process of selling an online business would be like and I learned a lot as I went.

When I sold it, my company had made over $2M in its lifetime (seven years) but was earning less than $1M per year. Don’t let a large social media presence fool you, this was a small company.

In this post, I’m going to break down the steps of selling a small company. This is stuff I wish I knew before getting started!

Deciding How To Sell My Small Company

When I started this process, I knew of three ways to sell:

• Work with a broker who has relationships with potential buyers
• List the company on a site like Empire Flippers where potential buyers can check it out
• Find a buyer yourself through your network

I’m sure there are other ways to make it happen, but these were the possibilities on my radar.

There are pros and cons to each approach to selling a company. I knew I wanted to work with a broker because I knew absolutely nothing about the process.

I wanted more handholding and someone in my corner vetting buyers and negotiating on my behalf, even if it meant giving them 15% of the sale.

Getting Started With A Broker

Typically, when working with a broker, there’s an exclusivity term. So even though I signed with a brokerage in October or November, our 90-day contract started the day it was listed.

After I signed, we started preparing the business for listing.

This process involved importing three years’ worth of profit and loss data into a grid and “cleaning up” in preparation for buyers to look at the biz.

Another step was filling out an extensive questionnaire about my business for potential buyers to read, and doing a recorded interview for them to watch before reaching out.

In January 2023, the business was listed.

This was one of my biggest mistakes. I wanted to list the business for sale in January to have another complete calendar year on the books. But what I totally overlooked was the fact that Q1 was typically the weakest every year. So when buyers came to look at the business, it looked like it was declining dramatically even though that was the pattern every year. It didn’t help that during the next steps I struggled to stay checked into the business and keep it growing.

Talking To Potential Buyers

Shortly after listing the business, Zoom meetings with potential buyers began.

These meetings gave me a chance to talk more about the company, why I was selling, and what the opportunities for growth are. Buyers asked me loads of questions and shared what their vision was for the company if they bought it.

This may or may not surprise you, but all the buyers I met with were men. It’s possible some women buyers expressed interest, but the broker had a policy where he only entertained cash buyers – meaning, only folks with enough cash in the bank now would be considered. No loans or anything like that.

At first, I was super nervous about these meetings. I was worried about being stumped by their questions or getting into business-related topics that went over my head. But after the first few, I realized that these people weren’t smarter than me. I deserved to be in those (Zoom) rooms. I talked to about 10 buyers.

Selling A Small Company Timeline

Here’s how it usually goes (of course there are other ways this plays out):

1. Find buyers (serious buyers signed an NDA at this point)
2. When someone is interested, they send an LOI (letter of intent)
3. Due diligence (where the buyer deep dives into your finances and company)
4. Purchase agreement (if due diligence goes well)
5. Money into escrow – similar to purchasing a house, the money is held in an account temporarily before the seller has access
6. Transfer assets
7. Once the transfer is complete, the money is released

I knew none of this going into the selling process. Needless to say, I learned a lot. And not every sale has each of these steps. Some sales may have more. It all depends on the type of company and the nature of the deal.

The Employee Issue

One of the toughest parts of this process, if not the toughest part, was not being able to share with my employees what was going on.

I was advised by the broker and every founder, CEO and entrepreneur I spoke with to not disclose any information about the sale before it was complete. As someone who values transparency, withholding this information for months was painful for me.

Why? Because if I told them about the sale, it was possible they’d start looking for jobs (maybe not, but you never know) and if they left during the sale process, it would compromise a lot and put the company/me in a tough spot. My advisors told me to keep things running as steadily as possible and wait until the purchase agreement is signed.

Getting My First LOI

I will never ever forget getting the first LOI for my business.

It felt like the real start of this process. Someone legitimately wanted to give me so much money (I can’t say how much) for the business I had built from my 2016 Macbook Pro, in tiny NYC kitchens.

That was probably one of the best days of my life. An LOI is not a guarantee of anything, but it’s the first step. And it’s so exciting!

I ended up getting three LOIs.

The Doom And Gloom Of Due Diligence

After the LOI step, we went right into due diligence with one of the buyers. You can only do due diligence with one buyer at a time.

Here’s what buyers typically look at in due diligence (this isn’t a full list, and it depends on the type of company):

• Finances – tax returns, profit & loss, expenses etc
• Legal
• Potential liabilities
• Operations
• Assets
• Vendors
• Products & services the company offers
• Existing contracts
• Intellectual property

Due diligence was so nerve-wracking.

My anxiety was at its worst during this stage. Not only did I have to handle a buyer discreetly poking around my company, but I also had to run things as normal and keep the biz afloat. Given my burnout and my struggle with keeping this secret from my team, this was all a huge challenge. There were days my anxiety completely took over and I couldn’t function, which made me put even more pressure on myself. It was a vicious cycle and I was depressed during this time.

Luckily, I had an amazing support system to rely on, including a community of women who were also in the process of selling called They Got Acquired.

Waiting For The Verdict

Depending on the company, due diligence can last for a week or a year or more. For me, it lasted over two months. The due diligence period is usually determined in the LOI phase.

Waiting for an answer from the buyer was so challenging! My broker helped during this process by checking in every few weeks on the due diligence process and nudging them to put together a purchase agreement.

Unfortunately, after all that, the buyer pulled their offer and I was back to square one.

It was so hard to go through due diligence and end up with no sale, but this is pretty common.

Once my engagement with this buyer and the broker was over, I had to make the hard decision to let my employees go. It was easily the hardest part of this journey.

A big reason the company didn’t sell is it wasn’t making enough money to support a team much longer or even myself. I actually didn’t pay myself at all in 2023. Forgoing my salary, we were just breaking even and I wasn’t able to grow it.

Starting Over With A New Buyer

After cutting back a ton of expenses and taking on all my employee’s work myself, I went out and found another buyer.

Having gone through each step (up until a purchase agreement) with the broker, I felt more equipped to take this on alone.

Back in January, I had posted in a Facebook group that my business was for sale. A few people reached out to me but nothing happened. So I went back to those contacts and one of them expressed strong interest.

Initially, we had many conversations about the business and what a transition will look like. We talked about price, drafted an LOI, signed an NDA, and handed all my due diligence docs over. This time, it was easier because I didn’t have any team members to hide this information from.

When the due diligence process is “successful” meaning, they want to move forward and purchase the assets or company, then comes the purchase agreement step.

I engaged with a lawyer for this part to make sure the purchase agreement covered all the bases. The agreement typically includes all the assets, the terms of the deal, timelines for the deal, terms regarding the transition, and any consulting the seller might do post-sale and non-compete terms.

Basically, I can’t start another meal prep online business for at least five years. And I don’t see myself wanting to!

Closing The Sale Of My Online Business

Exactly five months after my company was listed, I closed the sale with a buyer I found without using a broker (which meant not having to pay a broker fee).

We signed the purchase agreement and money was transferred to my account. I handed over all my accounts to the buyer and we started our two-month transition.

In these two months, I’ve been training the buyer and his team on all aspects of my company.

We also had to make an announcement to the community and customers, which was another super stressful moment. I’ll talk about that more in a future post!

Another important step in the closing: CELEBRATING!

To celebrate, I took my boyfriend out to the most expensive Japanese meal I’ve ever had. It was a gorgeous meal that I’ll never forget. Tears came to my eyes as I paid for the entire dinner myself. It was such a huge moment for me. And then I booked our tickets to Kauai (we leave tomorrow!).

Looking Ahead: Life After The Sale

I read a ton of articles and talked to many people about what I’m supposed to do after selling my company. Basically, the thing to do is talk to your accountant to make a financial plan and take a break.

So that’s what I’m doing, for a while. I’m writing this on my last day of work at my company. I’m losing access to all the social media accounts, email accounts and everything that connected me to the business digitally.

This morning I deleted the email account off my phone and got chills.

It’s going to take a while for all of this to sink in.

For now, my plan is to enjoy my Hawaii vacation. Then I’m taking at least two months off, which is great timing because we are moving from Seattle to the Bay Area. Next, I’ll start a new business… which I will definitely want to sell. But first I have a ton of processing to do I learned so much while selling my company. Yes, the money is meaningful, but the lessons learned are priceless.