[Quick Answer] How Long Does it Take to Sell a Business?
Selling a company is already an overwhelming task. On top of that, not knowing the timeline will only make it worse. You must make numerous decisions and hire professionals before it is too late.
The process of selling a business starts way before it is even listed for sale. Hence, knowing how long it will take to sell a company will give you time to prepare your exit plan accurately.
In this guide, we will tell you all about the factors affecting a business’s sales timeline and how to navigate them. Keep reading to make your sale a swift and profitable endeavor.
TL;DR - How Long Does it Take to Sell a Company?
A company's sales process can take any amount of time between a month to a year.
This duration is affected by several factors, such as your business type, financial performance, reputation, etc.
However, you can expedite the process by preparing properly and choosing the right time to sell. You might do these yourself, but hiring a business broker and other M&A experts is best to ensure effectiveness.
10 Factors that Affect the Process of Selling a Business
These are the 10 common factors that usually affect a company's selling procedure. Let's take a look at them for a better understanding:
1. Employee and Management Structure
The more divisions you have in your management structure, the more time it will take to roll out information. If you are way too involved in the day-to-day working of your company, transferring responsibilities will also cause a delay.
2. Quality of Assets and Infrastructure
Greater quality of assets and infrastructure attracts more buyers, which can ensure a rapid sale of your business.
3. Reputation and Brand Strength
You might find it challenging to find an interested buyer if your brand’s reputation in the market is not very good. Moreover, a weaker brand strength might lead to the buyers offering lower amounts than what you wish to sell your business for.
4. Legal and Regulatory Issues
Buyers wish to refrain from investing in a company that has multiple litigations associated with it. They usually identify these legal and regulatory issues during the due diligence process.
5. Business Type and Industry
Some business types are more lucrative to buyers than others. If your business falls under such an industry or type, the sales process will be significantly faster.
6. Financial Performance
Profitability is a big deciding factor for buyers. If your company has been performing great financially, more buyers will be interested in purchasing your company. If not, your prospects will be few unless the other factors in this list work in your favor.
7. Operational Efficiency
Buying a new business should not become a burden for the buyer. So, if they see how efficiently your company operates, they may try to expedite the selling process.
8. Business Valuation
Not everyone can afford to buy a company, and the number (most supposedly) shrinks further when a business is high in value. If your company is appraised at an extremely high value, finding a buyer who can afford that may take a lot of time.
9. Market Conditions
Most businesses are purchased through financing, and their interest rates may be affected by market conditions. If you want to sell your business fast, try to sell it while the interest rates are low.
10. Buyer Availability
All the above factors can only affect your sales if you have buyers in the market to begin with. You will have to spend a lot of time finding buyers if there is no organic demand.
How Do Market Conditions Influence the Selling Timeline?
The market conditions affect the selling company, the acquiring company, and the lending authorities.
If your company faces losses due to a crashing market, there is a high chance no buyer would want to risk purchasing it. This, in turn, will cause a delay in the business sale process as you will not get many offers.
Moreover, if your target company’s shares are affected, they may not be able to afford another business.
Banks may also not provide loans during harsh market conditions, making buying a company difficult.
Does the Size of a Company Impact the Selling Process Duration?
A company with too many hierarchies lengthens the transfer process, extending the entire sale’s duration. However, you can expedite the business selling process by being well-prepared.
On the other hand, a company with way too few employees can also face sales issues as there are hardly any replacements for most responsibilities.
Hence, you might find it challenging to convince a buyer to purchase your business if you have a limited staff.
How Can Preparing the Business for Sale Affect the Timeline?
If you conduct a self-review and prepare sufficiently, you will reduce the chances of facing issues during the sales process.
However, such stringent preparation requires expert guidance as you must also be the devil’s advocate. An unbiased and experienced third-person perspective will ensure no hiccups during the due diligence phase.
Further, you will need an M&A lawyer to handle all your company's legal and regulatory hindrances.
Hiring the perfect team to supercharge your M&A success is hard. There are many moving parts involved. So, let us interview and hire your team to speed up the process. Reach out to us via email or call for more information.
Are There Ways to Expedite the Sale of a Business?
Yes, there are multiple ways to ensure a quick business sale. Apart from preparing well, here are the steps you can take:
1. Choose the Right Time to Sell
The time when you sell your business can directly influence its timeline. Hence, you should contemplate the right situation before listing your business for sale.
For instance, you should not sell your business when the economy is down and /or your company is not performing well. In many cases, the time of the year also affects the sale’s timeline.
2. Set a Fair Sale Price
An amount that is way too high compared to your business’s original value will not attract any buyers. On the other hand, if the buyers deem it to be a fair amount for what your company offers, they will readily make a purchase.
A professional should appraise your business to ensure you get the right amount.
You can also use our valuation calculator to get a preliminary idea of how much your business should sell for. Additionally, you can understand how you can calculate the value of your company.
3. Sell Off-market
Selling your business off the market is a great way to make a quick sale. Here, you are selling your business confidentially to an interested buyer instead of listing your business for sale to the public.
Since you are advertising your business only to a handful of interested buyers, the chances of selling it faster increase. These are people from your niche industry, meaning you may not have to deal with any time wasters.
4. Hire an Experienced Business Broker
An experienced business broker has dealt with many M&A processes. Hence, they know what it takes to sell a business swiftly.
Be it negotiation or due diligence, the broker knows exactly what to do. Such support will improve the pace and make the process less hectic for you.
To help you find the right fit for your needs, Exitwise interviews, hires, and manages your team of experts. We have done this for multiple businesses and can do the same for you.
Our customers' success stories prove the benefits of working with us. If you want to sell your company profitably without complications, here’s how we can create an M&A dream for you.
How Long Does Due Diligence Typically Take in a Business Sale?
The due diligence process differs from company to company. While some might only check a few details before venturing into a new business, others take their sweet time.
This duration can also increase depending on your business type and industry. However, on average, the process takes about 45 to 180 days. But this number can get as high as 9 months, depending on the deal's complexities and your business.
How Does the Type of Buyer Influence the Length of the Sale Process?
The type of buyer you choose directly affects the sale process. These are some ways they can influence it:
Experienced buyers may close deals faster as they are more sure about what they are getting into.
A buyer from a similar niche may want a quicker sale as they are usually eager to remove you as a competitor.
A single buyer may take longer to buy as they may need to get their loan approved by the lender.
Private equity groups (PEGs) may extend the due diligence process by asking too many questions.
Alternatively, the financing process of PEGs is quicker than that of an individual buyer.
A strategic buyer would have done the necessary homework before showing any interest, which makes the process faster.
These are only a few examples of how the kind of buyer you have influences the overall buying process. There can be other instances as well where your buyer affects it.
Conclusion
Most business sellers wonder how long it takes to sell a business, but only a few have an answer. This question has no clear answer, as several situations affect the overall process.
The blog above answers most probable questions you might have regarding the sales process of a business. Read them properly before you sell your business to avoid any unnecessary delays.
You can further ensure a quick sale by trusting Exiswise to find you the finest M&A experts in the market. Our process is extremely simple to ensure smooth yet effective hiring. Here’s how we handle everything for you.
