Frequently Asked Questions from Sellers

Selling a business raises a lot of questions. Below are answers to the 22 questions we hear most often from business owners — covering everything from staff and taxes to timing and price.

Q1. Will I have to pay out vacation or sick time to employees when I sell?

This depends on state law and what your employee handbook says. In most cases, accrued vacation time must be paid out at closing, while sick time policies vary — some states require payout, others don’t. Your employee handbook typically governs this, so it’s worth reviewing before you list.

Q2. When should I tell my staff and customers that I’m selling?

Generally, we recommend waiting until the purchase documents are signed before telling staff and customers — this avoids unnecessary anxiety if the deal changes. The exception is long-tenured, trusted staff who may need to be looped in earlier to help with the transition. Any customer letter should be reviewed and approved by the buyer before it goes out.

Q3. Should I give my staff raises before I sell?

We recommend avoiding raises right before a sale. They throw off your cash flow numbers and can make a buyer nervous about rising costs. If a raise is unavoidable, talk to your High Mark advisor first so we can help you manage how it’s presented.

Q4. What if a family member is retiring with me — will the buyer need help transitioning them out?

Often yes. Buyers may want help transitioning a departing family member’s responsibilities, which can mean a few months of training a replacement employee.

Q5. How long will I need to stay on after closing to help with the transition?

It depends on the size of the deal. For businesses selling for under about $800,000, sellers typically stay on for a couple of months, or are available by phone and email as needed. For larger deals, plan on a longer transition. In most cases, buyers release sellers from day-to-day involvement after just a couple of weeks.

Q6. Should I shut down my corporation right after closing?

We recommend keeping your corporation open for about six months after closing to handle any cleanup items and outstanding bills.

Q7. What taxes will I owe at closing?

You’ll owe a final, prorated personal property tax handled through escrow. You’ll also owe income tax on the sale, due the following April 15 — your accountant will file a “Final” return, and the state will be notified of the dissolution.

Q8. Should I let my revenue slow down before I sell, since I’m on my way out anyway?

No — keep your revenue up and growing right through the sale. Lenders scrutinize a late revenue drop closely, and it can lead a buyer to ask for a lower price.

Q9. What’s actually included in the sale — just the business, or the building and everything in it?

The sale includes goodwill and equipment. Typically 75-80% of the purchase price is allocated to goodwill, $5,000-$10,000 to a non-compete agreement, and the remainder to equipment. Accounts receivable is sold separately (see below), and any personal possessions you want to keep should be listed on an exhibit so they’re excluded.

Q10. Should I sell my accounts receivable with the business, or collect it myself?

We generally recommend selling your A/R. You can sell it at a flat 85% of the balance, or on a tiered basis: 90% for A/R under 30 days old, 75% for 30-60 days, 50% for 60-90 days, and 5% for anything over 90 days. If you keep your A/R and have the buyer collect it for you, expect to pay a 5-10% collection fee. Unsold A/R is also the number one cause of post-sale disputes and litigation.

Q11. How long does it typically take to sell a business?

It depends on your revenue, industry, and location. Trade businesses like HVAC, plumbing, and electrical tend to sell faster than specialty, niche, engineering, or architectural firms, which can take a year or more. As a rule of thumb, businesses in or within about 30 minutes of a metro area sell in around 6-9 months; rural businesses often take 12-24 months.

Q12. Should I sell my building along with the business, or keep it?

That depends on a few things worth weighing: do you want to be a landlord, could your money earn a better return elsewhere, what are current market conditions, and can the buyer afford to purchase real estate along with the business? Owner-users typically pay a premium for real estate. Specialized or empty buildings can be hard to sell or lease and may sit on the market for 12+ months. In a good market, we generally recommend selling.

Q13. Can I stay on part-time instead of leaving completely?

Yes, if the business’s revenue can support both you and the new owner. This requires a negotiated compensation and employment agreement as part of the deal.

Q14. How is my sale price determined?

We start with your last three years of financials and prepare a certified valuation (CVA) using three weighted and averaged valuation methods, which we review with you. Real estate is priced separately using comparable sales, and then we set a final, consolidated asking price.

Q15. I run some personal expenses through the business — does that matter?

Cleaner books lend better, so it’s worth knowing this affects financing for a buyer. Let High Mark know about any of these “adjustments” early so we can account for them properly in your valuation.

Q16. Should I remodel or buy new equipment before I sell?

Light, cosmetic updates are fine, but avoid anything extravagant. Talk to your advisor before buying new equipment — it doesn’t always add value at the price you’d expect.

Q17. What should I do with the proceeds from the sale?

First, pay off any business or building debt at closing. Beyond that, we recommend consulting a CPA or financial planner — there may be retirement plan options or, for real estate, a 1031 exchange worth considering.

Q18. What can I do to increase my business’s value before selling?

Focus on growing your customer base and revenue, and avoid unnecessary major purchases. A clean, well-kept appearance helps too. Since value is based on your trailing three years of financials, there’s a limit to how much you can move the needle in the last 12 months — maintaining and growing revenue is the biggest lever you have.

Q19. Are non-compete agreements actually enforceable?

Yes, when they’re written correctly. We recommend consulting a legal professional to make sure yours holds up.

Q20. Do I need an attorney and a CPA involved in the sale?

Yes, strongly recommended for both you and the buyer. High Mark can refer trusted professionals if you don’t already have them.

Q21. Why should I use a business advisor instead of selling on my own?

Selling a business is far more complex than selling a home — from valuation and marketing to negotiation, financing, and closing. An experienced advisor’s expertise typically saves you significant time and money, and helps you avoid costly mistakes along the way.

Q22. What do I need to disclose to a buyer?

Only items of material significance — things like L&I claims, planned demolitions, environmental issues, or structural problems. Trivial items, like a squeaky cabinet door or bad break-room coffee, don’t need to be disclosed.