Selling a company you built is the largest financial decision most owners ever make, and the process has more moving parts than almost anyone expects going in.
Businesses close here every month, and the owners who do well are almost always the ones who treated the year before the sale as part of the sale. The ones who do badly usually made two or three structural decisions early, without advice, that could not be undone once an offer was on the table.
This walks through the whole sequence for a Chattanooga business, including the parts that are specific to Tennessee and to a metro that straddles a state line.
Step 1: Decide Whether You Are Actually Ready
Your reason for selling changes your negotiating position, and a buyer will ask in the first hour. Retirement, burnout, health, a partnership that has run its course, a relocation, or a genuine desire to do something else are all legitimate answers. What matters is whether the business is being sold from strength or from exhaustion, because a buyer can tell the difference and prices accordingly.
If you have the luxury of time, twelve to twenty-four months before you want to close is the window where preparation still pays. Below about six months, most of what follows becomes damage control.
Step 2: Make the Tennessee Entity Decision Before Anything Else
This is the step that gets skipped, and it is the one that is hardest to reverse.
Tennessee has no state personal income tax. The Hall tax on interest and dividends was repealed for tax years beginning January 1, 2021. Owners hear that and conclude the state takes nothing on a sale, which is wrong. Tennessee taxes at the entity level instead:
• Excise tax at 6.5% of Tennessee net earnings. The base starts from federal taxable income with state adjustments under Tenn. Code Ann. § 67-4-2006, so gain the entity recognizes on an asset sale is inside it.
• Franchise tax at 0.25% of Tennessee net worth, minimum $100. The old property measure on Schedule G was repealed by Public Chapter 950 in 2024 for tax years ending on or after January 1, 2024, so net worth is the only base now.
Corporations, LLCs, limited partnerships and business trusts are subject to both. General partnerships and sole proprietorships are outside them, because the statute draws its line at limited liability protection.
Compare that with a Georgia-side company in Catoosa, Dade or Walker County, where the owner pays Georgia’s flat individual rate on the gain, 4.99% for 2026 after HB 463. Neither state is automatically better. What decides the outcome is the entity, the basis, and how the purchase price gets allocated across equipment, inventory, goodwill and the non-compete. Every one of those is negotiable, and every one of them has to be modeled with your CPA before you agree to a number, because after the letter of intent the allocation is a concession you are paying for.
Step 3: Understand What the Business Is Worth
Pricing is the single largest determinant of whether a business sells at all. Overpricing is not a harmless opening position. It keeps qualified buyers from calling, and a business that has been visibly on the market for a year is negotiating from weakness no matter what it is worth.
Companies in the $500K to $10M revenue range are valued on a multiple of Seller’s Discretionary Earnings or EBITDA depending on size and on how much runs through the owner personally. SDE multiples generally sit around 1.5x to 3.5x and EBITDA multiples around 3x to 6x, with industry, growth and risk deciding the position inside the band.
A broker’s opinion of value built on your actual financials and comparable transaction data is the right starting point, and it should cost you nothing.
Step 4: Prepare the Business
Clean the Books
Three years of returns, profit and loss statements and balance sheets will be read by a buyer, a buyer’s accountant, and a credit committee. If personal spending is commingled or the statements do not tie to the returns, the deal stalls in diligence. Fixing it takes a bookkeeper and a few months, and there is no substitute.
Document How It Runs
Write down how customers get acquired, how work gets scheduled, how people get paid and how inventory gets ordered. Knowledge that exists only in your head is not transferable, and buyers price it that way.
Reduce What Depends on You
Promote someone. Take two consecutive weeks away and see what breaks. A business that survives the owner leaving the building is worth a materially higher multiple than one that does not, and the gap is not small.
Extend the Lease
Chattanooga metro industrial vacancy was around 2.7% with average asking rent near $7.76 per square foot in the third quarter of 2025. In a market that tight, a short lease is more dangerous than it would be elsewhere, because the buyer’s alternative to your space is expensive and slow. Start the landlord conversation early.
Resolve the Two-State Exposure
Three of the six counties in this metro are in Georgia. If your crews cross the line, your registrations, payroll withholding and sales tax obligations probably run in both states, and a buyer’s accountant will find any gap. Clean it up before diligence opens.
Step 4b: Assemble the Advisory Team, in the Right Order
Three people, and you do not need all of them on day one.
• The broker handles valuation, confidential marketing, buyer qualification, negotiation and keeping the transaction moving. In a two-state metro this also means holding licensure on both sides of the line, which is why the firm carries Georgia, Tennessee and South Carolina.
• The CPA handles entity structure, purchase price allocation and the franchise and excise position. Bring them in before you agree to a price, because the allocation is the largest lever on what you keep and it gets negotiated inside the LOI.
• The attorney drafts and negotiates the purchase agreement, the representations and warranties, indemnification and the non-compete. Devon Griger is admitted to the bar in both Georgia and Tennessee, which matters on a file that touches both.
Start with the broker to understand where you stand, then bring in the other two as the deal takes shape. Owners who try to run the process without any of the three almost always spend more on the mistakes than the fees would have cost.
Step 5: Confidentiality Is Harder in a Metro This Size
The Chattanooga metro is about 588,000 people. Metropolitan Atlanta is about 6.4 million. In a market this size your competitors know your foreman, your banker knows your landlord, and a single careless conversation travels further and faster than it would in a larger city.
The consequences are the usual ones and they are serious. Employees start looking. Customers hedge. Competitors use it in a sales call. A professional process markets a blind profile that describes the business without identifying it, and detailed information goes out only after a signed non-disclosure agreement and financial pre-qualification.
There is a second, local wrinkle worth naming. Because the trade communities here are small, blind profiles have to be written more carefully than in a big metro. A profile that says "commercial HVAC contractor in Hamilton County with 22 technicians" identifies you to everyone in your industry. Getting that balance right is most of the craft in the first thirty days.
Step 6: Market Beyond the Metro
A price is set by competition among buyers, so the practical question is how many qualified buyers can be brought to the table. In a metro of this size, not enough of them live here.
Atlanta is under two hours down I-75. Nashville and Knoxville are comfortable drives. Individual buyers relocating for the right company are a real and reachable pool, and the firm is licensed to transact in Georgia, Tennessee and South Carolina, which is the point of holding all three.
Chattanooga also has a specific advantage in who already lives here. Erlanger runs close to 6,000 employees, Hamilton County Schools about 5,800, Volkswagen around 5,200, BlueCross BlueShield of Tennessee about 4,100, the Tennessee Valley Authority about 3,900, CommonSpirit’s Memorial Hospital about 3,700, McKee Foods in Collegedale about 3,200 and Unum about 3,100. Employment at that scale produces corporate executives with real balance sheets and a reason to stay in the city, and they are a meaningful part of the individual buyer pool for companies in this range.
Step 7: Qualify Buyers Before Anything Sensitive Moves
Before identifying information goes out, a buyer should provide proof of funds or a lender pre-qualification, a signed non-disclosure agreement, and enough background for you to judge whether they can actually operate the business. Your broker handles this screening, and the point of it is to protect your time as much as your information.
One qualified buyer who understands your industry is worth more than ten who are browsing.
Step 8: Evaluate Offers on Terms, Not Just Price
An offer arrives as a Letter of Intent covering price, structure, financing, contingencies, transition and timeline. The headline number is the least informative part of it.
Since June 1, 2025, SBA’s SOP 50 10 8 requires at least a 10% equity injection on a full change of ownership, and a seller note only counts toward that injection if it sits on full standby for the life of the SBA loan and represents no more than half of the required injection. That single rule reshapes what a buyer can offer. Two LOIs at the same price can carry completely different amounts of money at closing and completely different risk to you, and understanding which is which is the difference between a good outcome and a long note.
Step 9: Survive Diligence
After the LOI, expect thirty to ninety days of verification: returns and financial statements, customer concentration, employee roster and compensation, the lease, equipment condition, contracts, licenses and permits, and any legal history. This is where most deals die.
Two items here are Tennessee-specific and worth pre-empting. Licenses generally do not travel with a business, so a buyer will need their own, and in the trades that is a real timeline. And the sale of your equipment and fixtures usually falls within Tennessee’s casual and isolated sale exemption from sales tax, on the reasoning that a business selling its own operating assets is not in the business of selling that property, though the burden of proving it sits with the taxpayer.
Step 10: Close
Closing runs through the definitive purchase agreement: price, allocation, representations and warranties, indemnification, non-compete and transition obligations. If real property moves with the business, Tennessee’s realty transfer tax is $0.37 per $100 of consideration or value, and Georgia’s is $1.00 for the first $1,000 and $0.10 for each additional $100 plus an intangible recording tax of $1.50 per $500 of the note capped at $25,000. On a building those are different enough that the closing statement should be modeled before anyone signs.
Most sales in this range take six to twelve months from engagement to closing, and a transition period of thirty to ninety days after it.
What Actually Kills Deals Here
After enough transactions in this market the failure modes repeat, and most of them are avoidable:
• Pricing off a number the owner needs. The market does not care what your retirement plan requires. An overpriced business sits, and a business that has sat is discounted twice: once on price and once on the buyer’s assumption that something must be wrong with it.
• Books that do not tie to the returns. This is the most common single cause of a dead deal. A buyer’s accountant who cannot reconcile the statements to the tax filings stops trusting everything else in the file, including the parts that were accurate.
• A lease with eighteen months left. At 2.7% metro industrial vacancy the buyer has no cheap alternative, so the landlord effectively holds a veto over your transaction. Negotiate the extension before you go to market, while you are still the tenant they are dealing with.
• Discovering the licensing problem in week nine. If the qualifying credential for the contractor license belongs to you personally and leaves with you, the buyer has a business they cannot legally operate above $25,000 per project. That has to be solved in the structure, not after the LOI.
• Two-state filings nobody kept up. Payroll withholding or sales tax that should have been running in Georgia and was not is a quantifiable liability, and it gets quantified at the worst possible moment.
• Letting the business drift during the process. Selling takes attention, and revenue that dips during diligence gets renegotiated. The buyer is underwriting the trailing twelve months, and those months are happening while you are distracted.
• Taking the first offer. The first offer is a data point. It is rarely the best one, and accepting it without testing the market costs more than the process would have.
Thinking About Selling?
I work with owners across the Chattanooga metro on both sides of the state line, some ready this year and some three years out. The first conversation costs nothing and produces an honest read on what the business would bring today and what it would bring after a year of preparation.
Schedule a confidential consultation → https://calendly.com/nolan-nolanscottteam
Or call me directly at 404-247-5880. Every conversation is completely confidential.