A service business has little a buyer can repossess, so the whole price rests on whether the customers stay. Preparation is therefore about evidence: showing that the relationships belong to the company, that the revenue repeats, and that the delivery does not depend on one person.
Get quotes to sell my business
Move the relationships to the company
Contracts in the company's name, more than one staff contact per client, a documented sales process, and a record of clients won by somebody other than you. Each is evidence against the assumption a buyer starts with, which is that the customers buy from you personally and will leave when you do.
Show the revenue repeating
Retainers and contracts price best. Where the work is projects, construct the repeat rate: what share of this year's revenue came from clients who also bought in each of the previous years. Buyers build this number themselves, so building it first and presenting it removes an argument and demonstrates that you understand your own business.
What diligence looks at
Client concentration, contract terms and any change of control clauses, staff agreements and restrictive covenants, utilization and pricing history, and the gap between what the owner is paid and what a replacement would cost. That last adjustment is often the largest single change to the earnings a buyer will make.
Other questions people ask
How are service businesses valued?
On a multiple of adjusted earnings, with the multiple set by how durable those earnings look without the owner. Identical profits can price very differently.
How long should I stay after the sale?
Longer than in an asset heavy business, because relationships transfer slowly. Six to twenty four months is common and is part of the consideration.
What raises the price most?
Turning owner relationships into company relationships and project revenue into contracted revenue. Both move the multiple rather than the earnings.