For entrepreneurs preparing to sell, one of the most common questions about the process they have is: How long does it take to sell a business? Through our experience, we’ve found that the average time it takes to sell a business is between 6 to 12 months. The timeline starts when a business owner signs a listing agreement, and ends at the closing of the deal.
Though luck and good timing can lead to a faster closing, it isn’t realistic to expect an accelerated purchase. That’s why it’s important for sellers to be prepared before putting their business on the market.
Here are some factors that can influence the time it takes to sell a business.
1. Marketing Strategy
During the marketing phrase, a business owner or broker markets the business to prospective buyers. The more buyers that your marketing reaches, the sooner you’ll start to receive offers. However, it’s important to take into account confidentiality. You don’t want word to spread to your customers and employees that you’re selling before you’re prepared to address their concerns. The news could impact your reputation and be taken advantage of by your competitors. Working with a broker will help ensure that the deal is kept confidential, and that your business is being marketed to the right buyers.
2. Industry & Location
The time it takes to find a buyer may depend on the popularity of the business’s particular industry. For example, the demand for IT businesses is high, so these companies tend to sell more quickly than many other industries, particularly those in a niche market. Additionally, the location of a business may be an influence on buyer interest. A rapidly growing, more desirable city adds to the draw.
3. Price
If a business is overpriced, it will continue to sit on the market and you may not receive many offers from buyers. This is where working with a broker can help, as they will conduct an accurate valuation and price your business accordingly. While your emotions are tied up into your business, they can offer an outside perspective and valuable industry knowledge.
4. Due Diligence & Closing
Once an “Offer for Purchase” has been made by a buyer and negotiations are complete, the due diligence period will begin. This part of the sales process can last anywhere from two to six weeks while the buyer reviews detailed financial statements, contracts, copies of leases, and so on. A broker can help to move the process along, streamlining the potential buyer’s review of all the business’s details. Ensuring that your business has clean and organized financial records and good legal standing can also help facilitate a faster sale.
5. DIY vs. Hiring A Broker
The financial savings of going the DIY route can be tempting. However, trying to sell a business yourself will likely only extend the timeline further. Brokers have the expertise to shepherd you smoothly through the process of selling a business, as well as valuable network connections to find the right buyer. Your time is better spent continuing to run your company, and that way you avoid the risk of lowering profitability during the sales process.
Your Guide Through The Business Selling Process
Global Business Brokerage is here to guide you through the business selling process. As lifetime entrepreneurs, we know what it takes to be a successful business owner. Using our years of expertise and network connections, we’ll get you to the finish line. Schedule a consultation with us.
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