How to Sell a Business in Ohio

Before you do anything else, find out what the business is worth today. Not what you need for retirement, and not what your neighbor got for his company. What a buyer will pay for your earnings, in this market, with your risk profile.

Valuation starts with recasting your financials. Your tax returns are written to reduce taxes. A buyer wants to see true operating earnings, so we add back your compensation, personal expenses run through the business, one-time costs, and non-cash items. That produces SDE for smaller businesses or EBITDA for larger ones.

The recast number is then compared to what similar companies actually sold for. Comparable transactions matter more than formulas. Two companies with identical earnings can sell a full turn apart because one has recurring revenue and a management team and the other has neither.

Do this early even if you are years out. A valuation is a diagnostic. It tells you exactly which parts of the business are costing you money at exit, while you still have time to fix them.

Buyers pay for earnings they can verify. If your books do not tie to your tax returns, every number you present is discounted, and lenders will not underwrite the deal at all.

At minimum you need three years of profit and loss statements and balance sheets on a consistent basis, a documented add-back schedule with support for each item, and monthly reporting that is current. Contractors also need a work-in-progress schedule that ties to the financials.

Stop running personal expenses through the business the year before you sell. Add-backs are normal and expected, but the more of them there are, the more the buyer questions the whole statement. A clean, boring set of financials is worth real money.

If your bookkeeping is on cash basis and your industry is judged on accrual, convert before going to market. Doing it mid-diligence looks like you are moving the numbers.

The single largest discount applied to small businesses is owner dependence. If you sell every job, hold every relationship, and make every decision, the buyer is not purchasing a company. They are purchasing your job, and they will pay job prices.

Fixing it takes time, which is why it needs to start well before the sale. Promote or hire a general manager. Move customer relationships to account managers. Write down how the work actually gets done, so the process survives you.

Test it honestly. Take two weeks off with your phone in a drawer. What broke while you were gone is what a buyer will discount.

Buyers price risk, and a handful of risks show up in almost every Ohio deal.

Confidentiality is not a courtesy. If word gets out, key employees leave, competitors call your customers, and your leverage collapses. Ohio is a small market and word travels.

The mechanics are straightforward. Buyers first see a blind profile that describes the business without naming it: industry, geography, revenue band, earnings, and what makes it attractive. Interested buyers sign a non-disclosure agreement. Only then do they receive the full information memorandum with your name on it.

Before anyone gets that far, they get screened. Proof of funds, acquisition history, and lender relationships. Most inquiries do not clear that bar, and screening them out is a large part of protecting your confidentiality.

The goal is several qualified buyers looking at the same time. One buyer is a negotiation. Several buyers is a market, and a market sets the price.

The letter of intent sets price, structure, and the exclusivity window. Most of it is non-binding, but the binding parts matter: exclusivity, confidentiality, and who pays which costs.

Structure is as important as price. Cash at closing, seller financing, escrow, earnout, and rollover equity all affect what you actually take home. A higher headline number with half of it contingent can be worth less than a lower all-cash offer.

Working capital is where sellers most often lose money after agreeing on price. The buyer expects a normal level of receivables, inventory, and payables to stay in the business. If the target is set too high, your price is reduced dollar for dollar at closing. Get your CPA into this conversation before you sign.

Sixty to ninety days of exclusivity is standard. Longer hands leverage to a buyer who can simply slow down while your other options go away.

Diligence is the buyer verifying everything you said. Financial, legal, operational, insurance, employment, and for contractors the WIP and contract review. It typically runs sixty to ninety days.

Deals die in diligence for one reason more than any other: surprises. Anything you know about and disclose early is a negotiation. The same item discovered by the buyer's accountant is a crisis and often a price reduction.

Run the business hard during this period. A revenue dip in diligence gives the buyer a justified reason to retrade the price, and it is the most common cause of a last-minute reduction.

Closing is documents and funding: purchase agreement, escrow instructions, lender conditions, lien releases, employment and non-compete agreements, and the transition plan. Then the money moves and you start the handover you agreed to.

Most small business sales in Ohio are structured as asset sales rather than stock sales, which affects your tax outcome. Asset sales allocate the price across asset classes, and that allocation drives whether proceeds are taxed as capital gain or ordinary income. Negotiate the allocation, do not accept the buyer's first schedule.

Ohio's Business Income Deduction and the elective pass-through entity tax can both meaningfully change what you keep. Bring your CPA in before the letter of intent, not after.

Many buyers in this size range use SBA 7(a) financing, which comes with its own rules: full purchase, limits on seller notes, and a standby period. Knowing whether your business is SBA-financeable widens or narrows your buyer pool before you go to market.