Here's How the Selling Process Works

1 The Typical Stages of a Business Sale

The sale of a business follows a clear process—even though every sale is unique. The following five phases will give you an idea of what to expect:

1. Preparation

You analyze your business, prepare the necessary documents, and decide whether to sell with or without an advisor. This is where you lay the foundation for the entire process.

2. Marketing & Candidate Selection

Your business is presented anonymously to potential buyers—either through a listing on DUB and/or by a targeted approach from an M&A advisor. Confidentiality is the top priority. Interested parties sign a confidentiality agreement, receive the documents, clarify their initial questions over the phone, and provide an indicative valuation. If expectations align, a face-to-face meeting follows. This phase reveals which interested parties are serious.

For small businesses, there is no structured bidding process in which offers are collected and compared. Typically, you negotiate the LOI with the first sufficiently qualified candidate. Only when multiple serious candidates are in the process at the same time is it possible (and advisable) to structure the timeline so that the candidates work in sync to generate competition.

3. Signing the LOI

You agree on the key terms with the preferred buyer and sign a Letter of Intent (LOI). The LOI specifies the purchase price, transaction structure, timeline, and exclusivity for the next phase.

4. Closing

The buyer conducts a detailed review of your company (due diligence), and you agree on the purchase agreement and sign it.

5. Transfer

You transfer the business to the new owner. This can be done in stages: many sellers support the buyer during a transition period of 3–12 months.

2 Share Deal vs. Asset Deal

One of the most important structural questions when selling a business: Do you sell the shares in your company (share deal) or individual assets (asset deal)? This choice has significant implications for taxes, liability, and the transaction process.

Share Deal: You sell the shares

• What happens: You transfer your ownership interests (e.g., GmbH shares) to the buyer. The company continues to exist as a legal entity.

• Advantages for you: Often more favorable from a tax perspective, as capital gains are taxed at a preferential rate under certain conditions. Contracts, licenses, and permits are automatically retained; no renegotiation is necessary.

• Disadvantages: Buyers also assume all liabilities, which makes them more cautious and leads to more extensive due diligence. This can prolong the process.

Asset Deal: You sell assets

• What happens: The buyer acquires individual assets (machinery, inventory, customer base, brand, etc.) from your company.

• Advantages for you: Clear separation—you retain the company and settle any remaining liabilities yourself. Often the only viable option in distressed situations.

• Disadvantages: Usually less favorable for the seller from a tax perspective. Contracts must be transferred individually or renegotiated. Employees are transferred in accordance with Section 613a of the German Civil Code (BGB).

3 Differences Between Sales Processes With and Without a Consultant

The process varies significantly depending on whether you manage the sale yourself or hire a consultant. Here’s an overview of the key differences:

Direct Sale: The Typical Process

• Create a listing: You post an anonymous description of your company on a platform like DUB

• Sign a confidentiality agreement: You review their profiles and send a confidentiality agreement to interested candidates

• Exchange of information: Send the information package, which includes a company presentation, annual financial statements, and a business analysis

• Phone call to answer questions: Typically, after sending the information package, a phone call follows during which you address the initial inquiries from interested parties

• Obtain a valuation estimate: You ask the interested parties for a rough price estimate to see early on whether expectations align

• Meeting in person: Often the decisive step for smaller deals

• LOI Negotiation: You negotiate the key terms with the preferred candidate and sign a Letter of Intent (LOI)

• Due Diligence + Purchase Agreement: The buyer conducts a detailed review of your company, after which the purchase agreement is negotiated—ideally with legal counsel

Advisor-Supported Process: The Typical Procedure

• Advisor prepares a teaser and company profile: professional documents for approaching buyers

• Targeted buyer search: The advisor actively reaches out to potential buyers and uses platforms such as DUB

• Non-Disclosure Agreement(NDA)+ Information Package: Interested buyers sign an NDA and receive the information memorandum

• Soliciting Indicative Offers: The advisor requests detailed indicative offers to pre-qualify interested parties with suitable price expectations

• In-Person Meeting: Only pre-qualified candidates are invited to a meeting with management

• LOI Negotiation: The advisor negotiates the letter of intent with the preferred buyer in your best interest

• Due Diligence + Purchase Agreement: The advisor coordinates the due diligence process and the negotiation of the purchase agreement through to closing

4 The Timeline: What Happens When?

Every sales process takes a different amount of time. The following guidelines are meant to give you a general idea: the actual duration depends heavily on the company’s size, industry, and attractiveness.

• Preparation (2–8 weeks): Prepare documentation, evaluate the company, define a sales strategy, and, if necessary, seek out advisors

• Marketing & Candidate Selection (varies widely): Post an ad or reach out to buyers, sign NDAs, share documents, clarify questions over the phone, obtain a valuation estimate, and meet candidates in person. Ideally, this phase lasts no longer than 2–3 months. In practice, however, it can take significantly longer than 6 months (especially for smaller companies).

• Signing the LOI (2–8 weeks): Negotiate the purchase price and sign the letter of intent (LOI). The duration is primarily driven by bank financing: Both you and the buyer need clear indications before signing the LOI that the proposed transaction structure is acceptable from the bank’s perspective

• Due Diligence (4–8 weeks): The buyer reviews documents in detail, including financials, contracts, and legal and tax matters

• Contract Negotiation (2–4 weeks): Attorneys draft and negotiate the purchase agreement. This may occur in part concurrently with due diligence.

• Signing + Closing: Depending on the closing conditions, the time between signing and closing can vary greatly, ranging from a few days to several months

5 Common Mistakes in the Sales Process

We see these six mistakes time and time again in business sales. If you’re aware of them, you can avoid them:

Insufficient preparation

Incomplete documentation, unclear processes, or no business valuation: these factors deter buyers and delay the process.

Take enough time to prepare. Complete documentation is the foundation of trust with the buyer.

Unrealistic asking price

Many sellers overestimate the value of their business—often because they confuse sentimental value with market value.

Have your business professionally appraised or use standard market methods. The market determines the price, not your own assessment.

Underestimating the Importance of Confidentiality

If employees, customers, or suppliers find out about the planned sale too early, it can destabilize operations.

Inform only your closest confidants. Require every prospective buyer to sign an NDA before sharing any details.

Settling for the first interested party

If you negotiate with only a single buyer, you have no bargaining power and often end up accepting less favorable terms.

Always approach multiple potential buyers. Competition improves your negotiating position and the price.

Betting on the wrong horse

You focus on a prospective buyer who doesn’t have the necessary equity to secure financing from debt capital partners—and realize it too late.

Ask about the financing plan early on. A serious buyer can explain how they intend to finance the purchase.

Bringing in Advisors Too Late

Some sellers don’t seek support until the process has already stalled or mistakes have been made.

Get help early on—whether it’s a sales consultant, tax advisor, or attorney. Correcting mistakes later is more expensive than preventing them in the first place.