Selling a plumbing business involves hundreds of decisions, documents, and moving parts — spread across 12–24 months. This checklist captures everything so nothing falls through the cracks. Use it as a roadmap, not a to-do list to rush through.
Phase 1: Pre-Sale Preparation (12–24 Months Out)
| Task | Status | Notes |
|---|---|---|
| Get an informal business valuation | ☐ | Understand your current range before planning |
| Clean up financials — 3 years of clear P&Ls | ☐ | Switch to accrual if on cash basis |
| Remove personal expenses from business P&L | ☐ | At least 18 months before close |
| Pay yourself a market-rate salary | ☐ | Documents add-back for buyer normalization |
| Document all add-backs with backup | ☐ | One-time items, personal expenses, owner perks |
| Hire or develop an operations manager | ☐ | Reduces owner dependency risk |
| Build service agreement / recurring revenue program | ☐ | Target 30–40% recurring revenue |
| Solve the master plumber license question | ☐ | Who holds the license after you leave? |
| Diversify customer base | ☐ | No single customer >15–20% of revenue |
| Document operations and key processes | ☐ | SOPs, dispatch, pricing guidelines |
| Review and clean up contracts | ☐ | Ensure key customer contracts are assignable |
| Resolve open legal or compliance issues | ☐ | Permits, OSHA, litigation |
| Upgrade fleet and equipment documentation | ☐ | Buyers will ask about age and condition |
Phase 2: Going to Market (3–5 Months)
| Task | Status | Notes |
|---|---|---|
| Engage M&A advisor or identify buyer approach | ☐ | Advisor vs. direct; define your process |
| Build virtual data room (VDR) | ☐ | Organized, labeled, access-controlled |
| Prepare Confidential Information Memorandum (CIM) | ☐ | Business overview, financial summary, growth story |
| Prepare normalized EBITDA schedule | ☐ | 3-year history with all add-backs documented |
| Identify and approach target buyers | ☐ | PE platforms, strategics, search funds |
| Sign NDAs before sharing any information | ☐ | Non-negotiable with all parties |
| Conduct management meetings with interested buyers | ☐ | Present the growth story; evaluate fit |
| Collect and compare Letters of Intent (LOIs) | ☐ | Price, structure, exclusivity, earnout, working capital |
Phase 3: LOI and Due Diligence (45–90 Days)
| Task | Status | Notes |
|---|---|---|
| Negotiate and sign LOI | ☐ | Focus on exclusivity length, earnout terms, working capital peg |
| Engage transaction attorney | ☐ | Experienced in M&A, not just general business law |
| Engage CPA for quality of earnings support | ☐ | Defend your EBITDA during buyer's QoE process |
| Grant buyer access to VDR | ☐ | Control access levels; track what's been viewed |
| Respond to due diligence requests promptly | ☐ | Delays extend timeline and signal disorganization |
| Manage license transfer process | ☐ | Start early — 30–90 days in most states |
| Plan employee communication strategy | ☐ | When, how, and who delivers the news |
| Negotiate purchase price allocation | ☐ | Maximize goodwill (LTCG) vs. equipment (ordinary income) |
Phase 4: Definitive Agreement and Close (3–6 Weeks)
| Task | Status | Notes |
|---|---|---|
| Review and negotiate purchase agreement | ☐ | Reps & warranties, indemnification, working capital |
| Negotiate indemnification cap and survival period | ☐ | Cap at 10–15% of deal value; max 18 months survival |
| Review and negotiate non-compete scope | ☐ | Geography, duration, definition of restricted activity |
| Review and negotiate transition agreement | ☐ | Your role, compensation, duration, deliverables post-close |
| Final working capital calculation | ☐ | Confirm peg; calculate closing adjustment |
| Confirm final wire instructions and escrow | ☐ | Work with your attorney; verify wiring details independently |
| Sign closing documents | ☐ | Bill of sale, assignment agreements, employment agreements |
| Receive and verify proceeds | ☐ | Confirm escrow holds and wire receipt |
Phase 5: Post-Close
| Task | Status | Notes |
|---|---|---|
| File Form 8594 (Asset Acquisition Statement) with IRS | ☐ | Required for asset sales; must match buyer's filing |
| File final entity tax returns | ☐ | Short-year return for the year of sale |
| Complete transition obligations | ☐ | Honor your transition agreement commitments |
| Monitor seller note payments (if applicable) | ☐ | Track payments; enforce security interest if missed |
| Track earnout metrics (if applicable) | ☐ | Request quarterly financials; verify calculations |
| Work with wealth advisor on proceeds | ☐ | Estate planning, investment strategy, tax minimization |
Also in the Lightning Path Guide Series
Own a HVAC business? See our companion guide: HVAC Business Sale Checklist
DISCLAIMER: The information on this page is provided for general informational and educational purposes only. It does not constitute — and should not be construed as — financial advice, investment advice, legal advice, tax advice, or any other form of professional advice. Nothing on this site creates a professional advisory relationship between you and Lightning Path Partners. Business valuations, transaction structures, and market conditions discussed herein are general in nature and may not apply to your specific situation. Always consult a qualified financial advisor, M&A attorney, business broker, or CPA before making any business or financial decisions. Full Terms of Use →
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