How long will it take to sell my business?

This is a common question!

I do find that often this question is asked by those business owners that are mentally ready to sell and move on but have businesses that are the least prepared for sale.

Have they held on to the business for that little bit too long? Are they now just over it and in need of a break? Has someone filled them with false confidence that their business will sell 'quickly because their business is such a great business.'

The truth is, the timeline for selling a business can vary significantly, Many factors can affect this timeline, from the business's size and complexity to market conditions. Understanding these factors can help you plan effectively and set realistic expectations.

As an example, after covid, there was plenty of uncertainty around, especially with those in the freight forwarding space, that deals were taking longer to settle.

The process of selling a business can be roughly broken into some key phases.

Preparation Stage:

Are you familiar with the saying that perfect preparation prevents piss poor performance? It applies to selling your business too. This phase can help on many levels and really depends on when you start preparing your business for sale. Some owners may start this process 12-24 months before they consider selling, while others may start preparing their business closer to the sale event.

In short, what we are referring to in this phase is, 'derisking' the business and ensuring that the information most likely to be asked during the sale process is prepared and ready for the due diligence.

A well-prepared business attracts more buyers and can significantly speed up the due diligence process.

Once the decision is made to list the business for sale, preparing the financials, completing the appraisal, completing the IM and collating all the information for DD can be down with a matter of weeks.

Marketing and Finding Buyers:

Once your business is ready for sale, the next stage is marketing it to potential buyers. This can be time-consuming, involving creating detailed listings and being sure it has the best opportunity to be seen by those most likely to be interested in the type of business that you have.

It is much more complex and involved than simply listing your business on the typical business sale websites. Having a more strategic and proactive approach that includes targeting competitors, complimentary industries and businesses, PE firms and other family office firms ensures that the potential sale is being seen by those most inclined to be interested in the acquisition opportunity.

Having a significant database of registered buyers is also a helpful tool to utilise.

Having a multifaceted approach may mean that the business needs to be positioned in a slightly different way to help the target audience understand and clearly link the benefits of exploring further.

Depending on the size of the business this could be anywhere from 3-12 months, as an average.

Negotiation and Due Diligence:

Ideally, the marketing efforts have led to finding multiple interested parties and getting them to the negotiating table at around the same time.

Buying/selling a business has many more variables than buying a house or a car. The way buyers, sellers, accountants, solicitors and brokers view the deal and how to structure it can vary significantly so negotiations are almost always expected and depending on the opposing points in the negotiation this phase can vary in length.

Once an agreement has been reached, the due diligence (DD) phase will begin. The purpose of this part of the process is more than just proving what was presented during marketing and negotiations, it is also an integral relationship-building part of the phase.

Depending on what is found during the DD phase there may be some renegotiations that happen which could extend the sale process further.

Depending on how far apart the buyer and seller are, the size and complexity of the business and the level of DD required, this could be anything from 1-6 months on average.

Closing:

The final stage is closing, involving finalising the sale agreement and handling various administrative tasks. The complexity of the negotiations and the efficiency of the legal teams affect how quickly you can close the deal.

By the time you get to this stage, most things should be all aligned and just a matter of formalities. 1-3 months should be ample time.

Summary and Key Takeaways:

• Prepare thoroughly to minimise delays during due diligence.
• Market effectively and proactively to attract the right buyers quickly.
• Anticipate negotiations and due diligence and be willing to entertain alternative options.
• The size and complexity of the business can impact the timeline
• Get ready before you are ready

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