How Long Will it Take to Sell my Business?
Of the many questions I get asked about the process of selling a business, I always joke that this is the one I can’t answer. There are just too many factors that come into play. While it may be impossible for me to say for certain how long it will take to sell your business, there are ways to speed up the process.
- Reasonably aggressive pricing: Pricing is one of the most important factors in a quick sale, and working with an experienced broker is one of the most important factors in making sure your business is priced correctly. While it might be tempting to think that the lower you price your business the faster it will sell, this isn’t always the case. There is a point at which a business can be priced too low relative to its cash flow, causing potential buyers to become suspicious of why you are selling. They might get the impression that you are trying to dump the business, and that you might know something they don’t. Buyers may be looking for a good deal, but they also expect to pay a reasonable price for a good business. An experienced broker can help you identify the realistic price range within which your business would sell. If speed of sale is one of your primary goals, consider going to market at the low end of this range.
- Be organized: Once you have a buyer interested in your business, you begin the lengthy process of meetings, discovery, offers, counter offers, due diligence, etc. The buyer will be requesting a lot of information throughout the process. Your broker will be there to help you know the right time to release the information, and having the information on hand will keep the process moving toward a quick close. Items to have ready, clean and organized include three past years and year-to-date financial statements, three past years tax returns, copies of any leases, and internal documents such as organization charts and policies manuals. Not only will having these on hand keep the process moving along quickly, but it will also put the buyer at ease seeing you are running a clean and organized operation. A confident and assured buyer is one that keeps moving to closing.
Ultimately, it is important to remember that selling your business is a negotiated transaction, and negotiations require give and take. Before you go to market, identify your top priority in selling your business. Is it a quick sale? Is it to maximize your profit? Is it to assure jobs for your employees? To achieve any of these goals, you will often need to make sacrifices in other areas. If the timeline is your only concern, be prepared to make concessions on price and other terms of the deal.
- It is impossible to say for sure how long it will take to sell your business, but there are steps you can take to speed up the process.
- If your primary goal is a quick sale, plan to price your business at the lower end of a realistic price range.
- Having key documents on hand will help speed up the sale of your business.