Third-Party / Strategic Sale
Sell to a strategic buyer or competitor, usually through a broker — the broadest market for sub-$1M-EBITDA shops.
Overview
A third-party sale lists your business — quietly or openly — to the widest pool of buyers: competitors, larger regional players, or individual buyers using SBA financing. For smaller owner-operated shops below the threshold that attracts PE, this is the most common path to a clean, all-cash-ish exit. Main Street businesses typically sell through a business broker; larger ones use an M&A advisor or investment banker who runs a structured, competitive process. The right intermediary and a little pre-sale cleanup usually pay for themselves in a higher price and better terms.
How It Works
- 1
Prepare and value
Clean up books, normalize owner add-backs, and get a defensible valuation before going to market.
- 2
Engage an intermediary
A broker (Main Street) or M&A advisor (lower-middle-market) markets the business confidentially and screens buyers.
- 3
Run a process
Confidential marketing, buyer outreach, and ideally multiple offers to create competitive tension.
- 4
Negotiate and close
LOI, diligence, purchase agreement, and close — often with a short transition period.
Pros & Cons
Pros
- + Widest buyer pool, including individual SBA-financed buyers
- + A competitive process can maximize price
- + Often a cleaner, faster break than internal transfers
- + Works well for sub-$1M-EBITDA shops PE ignores
Cons
- − Broker/advisor commissions (8–15% Main Street; 2–8% larger deals)
- − Confidentiality risk if word leaks to staff or competitors
- − Strategic buyers may cut your team or brand post-sale
- − Smaller deals lean on SBA financing, which adds time and contingencies
At a Glance
- Timeline
- Commonly 6–12 months from listing to close.
- Typical fees
- Business brokers ~8–15% on Main Street sales; M&A advisors 2–8% (Lehman/Double-Lehman) on larger deals; retainers of $5k–$10k/mo are common.
- Valuation impact
- A competitive, well-run process and clean financials are the surest way to lift the final number.
- Tax notes
- Asset vs. stock sale and allocation of purchase price drive the tax bill; plan the structure before the LOI.
Compare Other Paths
General information, not legal, tax, or financial advice. Deal-structure and fee ranges are directional norms — your situation will differ. Consult a qualified advisor before acting.