How Long Does It Take to Sell A Business?
Once the value of a company is determined, it can take anywhere from 6-8 months to sell.
If this is the first time selling your business, you probably have a few initial questions before moving forward with the process. One of these questions is something that is on every business owner’s mind; “how long will it take?” The time to sell can vary based on a number of factors, but we’ve had several businesses get offers within the first 30 days and close within 3 months! Over our 23 years, the average time it takes to close a business is 6 to 8 months from start to closing. Once we have officially listed a business, there are steps we take that might take longer than others. Remember that annual sales, business location, industry, cash flow multiples, and more can affect the price of the business, and can also affect how long it will take the business to sell. Below are the most common factors in the timing of selling a business:
Using a Business Broker
Seeking assistance from a business broker is the best way to sell your business as quickly and for the best price possible. An initial consultation will provide a business owner insight regarding the financials of the company as well as a projected timeline of the valuation and listing process. Viking has a team of financial analysts that value a company based on three years of tax returns, an interim profit and loss statement (P&L), an equipment list, and other important materials used to determine an accurate value of the company.
Once a business intermediary has all the signed documents and materials to list a business, including a business profile worksheet that covers all the details, they will post the listing to a variety of marketing sites. During this time, Viking will receive buyer inquiries from these sites and our team of experienced business brokers will reach out to potential buyers that have already been vetted by our firm.
Negotiation and Due Diligence
When a prospective buyer decides to buy a business, they will offer to buy the business with an “Offer for Purchase” document. It is the due diligence period that can take some time after the offer has been signed both ways and it varies by deal, but it usually takes anywhere between two and six weeks. During this time the buyer will become involved in reviewing detailed financial bank statements, contracts with suppliers, copies of leases, and more.
At Viking, we predict the total length of time from acceptance to closing (when funds are received) is typically in the range of 60-75 days and includes the due diligence phase, pre-closing, and the closing itself.
The industry can really make a difference in terms of how long it takes a business to sell. For example, we find that information technology companies sell much quicker compared to other companies in other industries because the demand is so high. An IT or MSP company will typically sell faster than a niche company such as a motorcycle dealership or custom cabinetry manufacturing business.
Location plays a large part in desirability. If your business is in a growing and desirable area, the business is more likely to receive buyer inquiries at a faster rate compared to other businesses that are listed.
Selling your company can be painless if you use an experienced business broker to find the perfect buyer. Even though it can take anywhere from 6-8 months to sell a business, with an experienced business intermediary, the right price, the right buyer vetting, and the right seller financing, a business can sell in no time. Viking Mergers & Acquisitions is here to provide business owners with a process that works. Read more about our seven-step selling process and contact us today for a free consultation and valuation of your business.