Buying or selling a business is one of the biggest financial moves most owners ever make, and it’s also where expensive mistakes happen fast. Deals fall apart, prices get chipped away, and surprises show up late because one side doesn’t understand how the other is thinking. These eight steps walk you through the entire process from both sides of the table so you can avoid expensive missteps and negotiate stronger terms.
Step One: Pre-Offer Preparation
This is where deals are won or lost long before a number ever shows up.
Buyers need clarity before emotion takes over. Are you buying a business or buying yourself a job with longer hours and more stress? How much cash do you really have access to, not just on paper? What kind of debt are you comfortable carrying? How will this fit your life three, five, or ten years from now? Buyers who skip this step fall in love too fast and pay for it later.
Sellers have even more work to do here. This is where value gets built. Clean books matter. Normalized EBITDA matters. Personal expenses that made sense as a tax strategy need to come out if you want real offers. Buyers don’t want a business that only works because you’re holding it together. Systems, recurring revenue, and consistency are what buyers pay for. The earlier you start preparing, the stronger your position gets.
Step Two: NDAs and Pre-Offer Conversation
This is the first real interaction, and both sides are sizing each other up.
Buyers need to sound credible, not curious. Be clear about why you’re looking, what you’re capable of, and what kind of deal you’re pursuing. Having an NDA ready isn’t a formality, it signals that you’re serious and professional.
Sellers need to stay in control. Share enough to keep the buyer interested, but don’t overshare and don’t sound rushed. Avoid pinning yourself to a hard price too early. This stage is more like a first date than a proposal. You’re deciding whether it’s worth continuing the conversation.
Step Three: Initial Disclosure and Due Diligence
This is where you move past the story and start looking at the numbers, but only at a high level.
Sellers usually open up tax returns, basic financials, asset lists, and a snapshot of how the business runs. How this information is presented matters more than most owners realize. Clean, organized disclosures make buyers comfortable. Messy or inconsistent information creates doubt that follows you through the rest of the deal.
Buyers should use this phase to connect dots, not nitpick. You’re looking for patterns. Do the numbers tell a consistent story? Does the growth make sense? Are margins realistic? You’re not trying to prove anything yet. You’re deciding whether this business is worth putting real time and energy into.
Step Four: The Letter of Intent (LOI)
This is where the deal starts to take shape.
For buyers, the LOI is where you lay out how you want the deal to work. Price is important, but terms are just as critical. Seller financing, earn-outs, escrows, and timing all belong here. The mistake buyers make is assuming they can sort that out later. Once the LOI is signed, changing direction gets harder.
For sellers, it’s important to remember the LOI is nonbinding, but it still matters. Signing it usually means hitting pause on other buyers and committing time to this one. Pay attention to exclusivity periods and deadlines. A strong LOI protects you from getting stuck in deal limbo with someone who can’t or won’t close.
Step Five: Confirmatory Due Diligence
This is the most stressful stage and where deals often die, but there's no way around it.
Buyers dive deep here. Financials get verified. Contracts, leases, employees, systems, and risks all come under the microscope. This is where buyers make sure the business they’re buying matches the business they were shown.
For sellers, this is where patience matters. It can feel intrusive and exhausting, but it’s part of the process. Deals don’t usually fall apart because of diligence itself. They fall apart because sellers get frustrated, disorganized, or emotionally checked out. One of the biggest mistakes is mentally selling the business too early. When buyers sense urgency or fatigue, leverage disappears.
Step Six: Legal Documents
This is where friendly conversations turn into enforceable agreements.
Asset purchase agreements, stock purchases, financing terms, noncompetes, consulting agreements, earn-outs, leases, and IP transfers all get nailed down here. These documents decide who’s responsible for what and what happens if things don’t go perfectly.
Both sides need to stay involved. Lawyers are essential, but this isn’t the stage to tune out. Set timelines. Ask questions. Read what you’re signing. Most lawsuits don’t come from bad intentions. They come from vague or sloppy documents that didn’t reflect what the parties actually agreed to.
Step Seven: Closing
Closing is more than just signing papers.
Money moves. Ownership changes. Employees and customers find out. Accounts, licenses, and authority shift hands. The order and timing matter. This is why escrow agents and closing attorneys exist. Deals closed casually tend to create problems later.
Buyers shouldn’t rush just to say it’s done, and sellers shouldn’t assume the deal is finished until the money actually clears. Closing is about sequencing, not speed. Funds, documents, keys, access, and authority all have to change hands in the right order. Employees need to hear the news at the right moment. Customers and vendors need clarity, not rumors. This is why experienced deals use escrow or a closing attorney to control the process. When closing is rushed or sloppy, confusion shows up immediately, and confusion almost always turns into conflict.
Step Eight: Post-Closing and the First 100 Days
This is where the deal either works or quietly unravels.
Buyers need a real plan for the first ninety to one hundred days, not just a hope that things “work themselves out.” Employees want stability and leadership right away. Customers want reassurance that nothing is breaking or disappearing. Systems need attention because the business you thought you bought on paper is never exactly the business you inherit in real life. Culture, communication, and execution matter.
Sellers should expect to stay involved for a period of time, especially if seller financing or an earn-out is part of the deal. Boundaries and compensation need to be clear. Buyers should spell out expectations in writing. Sellers should be honest about what they’re willing to do. Assumptions here are how good deals turn into bad relationships.
The Bottom Line
When you understand how both buyers and sellers think at every stage of a deal, everything changes. You negotiate smarter, spot issues before they become expensive, and keep control of the process instead of reacting to it. If you’re thinking about buying or selling a business and want a clear second opinion before making a major move, my team at KKOS Lawyers does this work every day. We help business owners map out the deal, understand the numbers, and handle everything from the NDA and LOI through closing and post-closing agreements, with clear scope and fixed pricing. Book your free 15-minute call with one of our client advisors so you know exactly what you’re stepping into.
The right guidance doesn’t just make the process smoother. It can dramatically change the outcome of the deal.
