How long does it take to sell a business?
The answer is, it depends.
It may be exciting to start the process of selling a business. It also may be emotional or cause a great deal of anxiety − and for good reason. A lot of work goes into running a business, and a lot of work goes into selling it.
Business owners often exhibit a great sense of urgency to close a deal once they’ve made the decision to sell. The truth is, the time it takes to sell can fluctuate, and is often longer than owners predict.
Most brokers agree that, despite a BizBuySell survey on the selling process that found that nearly half (44 percent) of owners believed the entire sales process would be finalized in less than five months, the timeline is usually between six and 11 months.
That timeline is only accurate if a knowledgeable broker like Michigan Business Broker is on board.
Working with a broker, sellers should set an accurate timeline, know and collaborate on the process, and avoid any pitfalls that could affect the speed of the sale.
Setting the Clock
Crafting an appropriate timeline starts with preparation and ends with setting aside enough time to close the deal.
To begin, set aside about six weeks to gather the proper documents and paperwork, as well as find a broker, then put a substantial amount of time for setting the valuation, listing data, and market the sale. The majority of the timeline should be allocated to marketing, something a broker can speed along substantially.
For the estimated 11 months (48 weeks) it takes to complete a sale, here is what the timeline that includes help from a broker may look like.
4 weeks: Prepare documents, financial statements, and physical building for sale
2 weeks: Seek help from a broker
6 weeks: Setting the valuation and preparing for listing
6 months (24 weeks): Marketing efforts
4 Weeks: Negotiations
2 months (8 weeks): Set aside closing time for final paperwork
Know the Process
Keep in mind, the timeline of how long it takes to sell a business is only a general guide. Ultimately, there are many factors that impact the speed.
To begin with, knowing the process can help keep you on track and moving forward toward a sale.
The seven steps often taken during a successful, timely sale are:
- Determining the value of your business
- Cleaning up financials
- Preparing the exit strategy
- Boost sales
- Find a broker
- Pre-qualify buyers
- Get contracts in order
Working with a broker to get through these steps, sellers will be on a solid track to meet goals and expectations and avoid common pitfalls.
Other Factors
In general, following the process and setting a timeline will keep a seller on track. However, there are some things that could slow or speed sales.
For example, the wrong price tag often impacts the type of buyer interested in a business.
Each buyer has their characteristics that influence how long it will take to sell. Some will need longer due diligence periods, while others need more time to line up financing.
Other factors that affect sale times include:
- Industry: Some industries are more appealing than others, such as an industry that requires specific licensing
- Location: Businesses located in up-and-coming cities can appeal to buyers
- Structure: Streamlined processes and well-tracked finances can speed sales
- Clear goals: If you have a clearer picture of what you are looking for out of the sale ahead of time, it will assist the broker in finding more qualified buyers to purchase your business.
Getting it Done
Now that you know how long the process can take and what steps affect it, you can better prepare for the sale of your business.
Ensure to get the proper support, set a clear timeline, and jump into the process prepared with the appropriate documents.
To take the next step in preparing to sell your business, click below to request a free business valuation or call us today.