Buying or Selling a Business: The External View
There is the oft-told story about Ray Kroc, the founder of McDonalds. Before he approached the McDonald brothers at their California hamburger restaurant, he spent quite a few days sitting in his car watching the business. Only when he was convinced that the business and the concept worked, did he make an offer that the brothers could not refuse. The rest, as they say, is history.
The point, however, for both buyer and seller, is that it is important for both to sit across the proverbial street and watch the business. Buyers will get a lot of important information. For example, the buyer will learn about the customer base. How many customers does the business serve? How often? When are customers served? What is the make-up of the customer base? What are the busy days and times?
The owner, as well, can sometimes gain new insights on his or her business by taking a look at the business from the perspective of a potential seller, by taking an “across the street look.”
Both owners and potential buyers can learn about the customer service, etc., by having a family member or close friend patronize the business.
Interestingly, these methods are now being used by business owners, franchisors and others. When used by these people, they are called mystery shoppers. They are increasingly being used by franchisors to check their franchisees on customer service and other operations of the business. Potential sellers might also want to have this service performed prior to putting their business up for sale.
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What Would Your Business Sell For?
There is the old anecdote about the immigrant who opened his own business in the United States. Like many small business owners, he had his own bookkeeping system. He kept his accounts payable in a cigar box on the left side of his cash register, his daily receipts – cash and credit card receipts – in the cash register, and his invoices and paid bills in a cigar box on the right side of his cash register.
When his youngest son graduated as a CPA, he was appalled by his father’s primitive bookkeeping system. “I don’t know how you can run a business that way,” his son said. “How do you know what your profits are?”
“Well, son,” the father replied, “when I came to this country, I had nothing but the clothes I was wearing. Today, your brother is a doctor, your sister is a lawyer, and you are an accountant. Your mother and I have a nice car, a city house and a place at the beach. We have a good business and everything is paid for. Add that all together, subtract the clothes, and there’s your profit.”
A commonly accepted method to price a small business is to use Seller’s Discretionary Earnings (SDE). The International Business Brokers Association (IBBA) defines SDE as follows:
Discretionary Earnings – The earnings of a business enterprise prior to the following items:
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income taxes
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nonrecurring income and expenses
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non-operating income and expenses
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depreciation and amortization
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interest expense or income
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owner’s total compensation for one owner/operator, after adjusting the total compensation of all other owners to market value
Here are some terms as defined by the IBBA:
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Owner’s salary – The salary or wages paid to the owner, including related payroll tax burden.
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Owner’s total compensation – Total of owner’s salary and perquisites.
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Perquisites – Expenses incurred at the discretion of the owner which are unnecessary to the continued operation of the business.
Developing a Multiplier
Once the SDE has been calculated, a multiplier has to be developed. The following (just as a guideline) should be rated from 0 to 5 with 5 being the highest. For example, if the business is a highly desirable business in the current market, “desirability” would be rated a 4 or 5. If the business is in an industry that is quickly declining or nearly obsolete, “industry” would be given a 0 or 1 rating.
Age: Number of years the seller has owned and operated the business.
- Terms: Is the seller willing to offer terms? For example, will the seller accept 40 percent as a down payment with the seller carrying back 60 percent at terms the business can afford while still providing a living for the buyer?
- Competition: Consider the local market.
- Risk: Is the business itself risky?
- Growth trend of the business: Is it up or down?
- Location/Facilities
- Desirability: How popular is the business in the current market?
- Industry: Is the industry itself declining or growing?
- Type of business: Is the business type easily duplicated?
The average business sells for about 1.8 to 2.5. Obviously, if the SDE is solid and the multiple is above average, the price will be higher. Keep in mind that the price outlined includes all of the assets including fixtures and equipment, goodwill, etc. It does not include real estate or saleable inventory. The price determined above assumes that the business will be delivered to the buyer free and clear of any debt.
Veteran Wisdom
When all else fails, the words of a veteran business broker will work.
Asking Price is what the seller wants.
Selling Price is what the seller gets.
Fair Market Value is the highest price the buyer is willing to pay and the lowest price the seller is willing to accept.
Sellers should keep in mind that the actual price of a small business is about 80 percent of the seller’s asking price.
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Burnout: An Ever-Present Threat
Burnout is an often-used reason for an owner selling his or her business. Potential buyers may have trouble accepting this as a valid reason for sale. However, burnout is a valid reason for selling one’s business.
A business owner can experience burnout even with a business that’s successful and growing. Many independent business owners feel they’ve worked hard, made their money, and now is a good time to cash out and move on, before burnout endangers the health of the business.
The following warning signs should remind a business owner that cashing out beats burning out:
You are overwhelmed on a daily basis.
When a business owner is a one-man show, even small tasks and minor decisions can seem bigger than Mount Everest. These owners have been shouldering the burden alone for too long, and the isolation has taken its toll.
You sense a failure of imagination.
Burnt-out owners are so close to their work that they lose perspective. Prioritizing becomes a major daily challenge, and problem solving sometimes goes no further than the application of business Band-Aids that cost money in the long run rather than increasing profits.
The joy is gone.
Although owning a business is hard work, it should also provide a good measure of enjoyment. When the work day begins with dread or boredom, the owner probably needs a change of scenery and a new challenge.
You are simply exhausted.
Being “just too tired” is a complaint heard just as often from the owner of the successful business as from the business that’s struggling to survive. In fact, a business that is growing will create increased demands of time and energy.
No matter what the status of the operation, the sheer work of keeping a business going day after day, year after year, is enough to encourage a business owner to make a change. This kind of schedule is not for everyone; in fact, statistics show that it’s hardly for anyone on a long-term basis.
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How Long Does It Take to Sell a Business in Indiana?
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 7 min
The short answer: Selling a business in Indiana typically takes 6 to 12 months from listing to closing. In our experience at Indiana Equity Brokers, well-prepared sellers with clean financials and realistic pricing close in 6–9 months. Sellers who list before they’re ready — messy books, inflated price, no documentation — often wait 12–18 months or don’t close at all. The single biggest variable isn’t the market. It’s how prepared you are on day one.
Most sellers ask this question the wrong way. They want to know how long it takes. What they should be asking is: what controls the timeline — and what can I do right now to shorten it?
After more than 23 years and 887+ closed transactions in Indiana, I can tell you the answer isn’t mysterious. It comes down to a handful of factors you have direct control over. This article walks through all of them.
The Realistic Timeline for Selling a Business in Indiana
The national median close time for a Main Street business is roughly 170 days — just under 6 months — according to recent market data. But that’s from listing to close, not from the day you decide to sell.
Add 30–90 days of pre-market preparation, and the full process from “I’m ready to sell” to “check cleared” looks more like this:
- Preparation phase: 1–3 months (valuation, documentation, assembling your team)
- Marketing & buyer outreach: 2–4 months
- Due diligence: 4–8 weeks
- Financing & closing: 4–8 weeks
Total: 6 to 12 months is realistic for most Indiana sellers. Complex deals — larger companies, SBA financing, multiple buyers at the table — can run 12–18 months. Simple, well-documented businesses with motivated buyers have closed in under 90 days.
The key is that each phase builds on the one before. If your financials aren’t clean, due diligence drags. If you’re overpriced, you spend 6 months on the market before reducing the price — and now buyers wonder what’s wrong with the business.
What Actually Controls the Timeline
1. How Realistic Your Price Is
This is the biggest one. Overpriced listings sit. They attract the wrong buyers, generate low-quality interest, and force a price reduction — which raises red flags for the next round of buyers who wonder why it’s been on the market for months.
A business priced at 3x SDE when the market says 2.5x will take twice as long to sell, if it sells at all. At Indiana Equity Brokers, we use a detailed free business valuation process before we go to market — not to give sellers the number they want to hear, but the number that will actually get the deal done.
2. How Clean Your Financials Are
Buyers need three years of tax returns and financial statements. If your books are a mess — personal expenses run through the business, unexplained fluctuations, inconsistencies between returns and P&Ls — due diligence takes longer. Sometimes it falls apart entirely.
What kills deals isn’t usually price. It’s the books. A buyer who gets two weeks into due diligence and can’t reconcile the numbers will walk. That sets you back to square one, months later.
Clean, consistent, well-documented financials are the single best thing you can do to shorten your timeline. If your books need work, start there — even if you’re not planning to sell for another year.
3. Whether SBA Financing Is Involved
All-cash buyers close fastest. But most Main Street deals in Indiana involve SBA financing. An SBA 7(a) loan adds 30–60 days to closing because the lender requires its own appraisal, environmental checks, and underwriting. That’s not a problem — SBA opens your business to far more buyers than cash-only — but plan for it.
One thing that helps: choosing a business broker who works regularly with SBA-preferred lenders. We know which lenders move quickly and which ones add unnecessary delays.
4. How Ready You Are on Day One
Sellers who have everything organized before they list move faster than sellers who scramble to gather documents after a buyer signs an NDA. Here’s what you should have ready before you list:
- Three years of tax returns
- Three years of P&L statements and balance sheets
- A copy of the lease (and any assignment clauses)
- An equipment list with rough values
- Key employee agreements (if applicable)
- Copies of any licenses, permits, or contracts that transfer
This isn’t a checklist of nice-to-haves. It’s what every serious buyer will ask for. Having it ready means you don’t lose 3 weeks on document requests while the buyer’s interest cools.
The Phase Most Sellers Underestimate: Due Diligence
Sellers tend to assume that once a buyer makes an offer and both sides sign a letter of intent, the deal is basically done. It isn’t.
Due diligence is where deals live or die. A typical due diligence period runs 30–60 days. During that window, the buyer’s accountant goes through your books, the buyer’s attorney reviews your contracts, and the lender orders an appraisal. Any one of these can surface an issue that kills the deal or renegotiates the price.
According to research on M&A transactions, roughly half of deals that reach due diligence never close. At Indiana Equity Brokers, our close rate is significantly higher than that industry average — because we screen buyers before an LOI is signed and we prepare sellers to pass due diligence, not just survive it.
The way to protect yourself: understand why deals fall apart before you get to that stage. The surprises that kill deals aren’t usually surprises to the seller — they’re just things the seller didn’t think to disclose upfront.
What You Can Do Right Now to Sell Faster
Start preparation before you’re ready to list. Sellers who begin organizing their financials 6–12 months before they want to go to market consistently get better outcomes — faster closings, fewer surprises in due diligence, and stronger offers.
Price it based on data, not hope. A realistic price based on actual comparable transactions in your industry will attract serious buyers faster than an aspirational number that scares them off. Curious what your business is actually worth? Our free valuation takes about 15 minutes and gives you a honest number.
Work with a broker who moves deals. Not all brokers operate at the same pace. At IEB, we don’t sit on listings — we have an active buyer database, a structured marketing process, and a 23-year track record of closing deals across Indiana. You can see our recent transactions to get a sense of the businesses we’ve sold and how they moved.
If you’re earlier in the process and want to understand the full process for selling a business in Indiana, our selling tutorial covers it step by step.
Frequently Asked Questions
How long does it take to sell a small business in Indiana? Most small businesses in Indiana sell within 6 to 12 months of listing. Well-prepared sellers with clean financials and realistic pricing typically close in 6–9 months. Businesses with documentation gaps, pricing issues, or slow SBA financing can take 12–18 months. The preparation you do before listing is the biggest lever you have on the timeline.
What slows down a business sale the most? Overpricing and poor financial documentation are the two biggest timeline killers. Overpriced listings sit on the market for months before a price reduction, and that price cut signals to new buyers that something is wrong. Messy books drag out due diligence — or end it. A third factor is seller unavailability: buyers lose confidence when sellers go dark during the process.
Does having a business broker make the sale faster? Yes, meaningfully. An experienced broker narrows your buyer pool to qualified candidates, manages the documentation process, coordinates with lenders, and keeps the deal on track during due diligence. At Indiana Equity Brokers, we’ve closed 887+ transactions in Indiana — we know which steps slow deals down and how to stay ahead of them.
How long does due diligence take when selling a business? Due diligence typically runs 30 to 60 days for a Main Street business in Indiana. Complex deals with real estate, multiple entities, or SBA financing can take 60–90 days. The best way to shorten it is to have all documentation ready before the buyer begins — not after they ask for it.
Can I sell my business faster if I lower the price? Sometimes, but price isn’t always the bottleneck. If the delay is due to documentation issues or a slow financing process, a price cut won’t help. If you’re genuinely overpriced relative to market, then yes — a price correction can bring qualified buyers back quickly. A good broker will tell you honestly which problem you’re dealing with.
How Long Is Too Long?
If your business has been listed for more than 9–12 months without a serious offer, something is wrong. It’s usually one of three things: the price, the presentation, or the broker.
At that point, the right move isn’t to wait longer. It’s to get a second opinion on what’s actually holding the deal back. That might mean a pricing adjustment, better marketing materials, or a fresh start with a more active broker.
If you’re in that situation, or if you’re just starting to think about selling, a confidential conversation costs nothing. I’ve helped hundreds of Indiana business owners through this process — some who sold quickly and some who needed to reset. Either way, you deserve honest answers, not a sales pitch.
Read MoreWhen to Create an Exit Strategy
There is the old saying that the time to develop an exit strategy is the day you open for business. Sounds good, but it’s not very realistic. Further, it also isn’t very optimistic. On the day you open for business, thoughts about how you get out of it aren’t pleasant, or helpful, thoughts. However, as you get the business to a place where you have a bit of extra time to plan, you will find that the things you need to do to improve your business are some of the very things you will need to work on to plan an exit strategy.
You can’t predict misfortune, but you can plan for it. One never knows when an accident or illness will force one to sell. When the drive to your business becomes filled with dread, maybe it’s time to consider selling. The following ideas will improve your business, even if you’re not currently considering selling. Dealing with these areas will also supply the information a buyer will most likely be looking at when the time does come to sell.
Buyers want cash flow.
This, at least on the surface, is the thing a potential buyer will want to look at.
Appearances are important.
You may think everything about the business looks fine, but the two letters on the neon sign that don’t work indicate to a possible buyer that the seller may have lost interest in the business, causing them to also wonder what else doesn’t work or has been neglected.
There is probably more value than you think.
Business owners often don’t look at things that do create real value such as: customer lists, secret recipes, specialized computer systems, programs, customer loyalty programs, etc.
Eliminate the surprises.
Make sure the lease is transferable and that your landlord is willing to cooperate. Resolve that issue with town hall. Resolve the problem with that angry customer. Minor problems and issues will often raise their ugly heads during sensitive times, spooking a possible buyer. So, the time to resolve them is before going to market.
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