In my experience, even when the business is priced to sell, this can vary widely depending upon the industry sector, the size of the business, the unique character of the business and its owner, and even the general state of the economy.
Generally, when the selling price is likely to be in excess of $1M, I advise my selling clients to plan on the process taking about a year to 18 months, though in some industries – particularly construction related – it could take much longer.
Typically, it takes a couple of months to gather, analyze and summarize all of the relevant information about the business that a serious buyer will want to see. In this process, the M&A advisor make have some suggestions for the seller about how to improve the appearance/ marketability/ selling price of his business, and they may mutually agree to keep the business off the market until the seller has time to implement some of these suggestions.
From the time the business and the marketing materials are ready, it will likely take several months to identify and pre-screen qualified buyers. Typically, the larger and more specialized the business, the fewer qualified buyers, and the longer it may take to connect with them. After some preliminary discussions, serious buyers will want to meet face-to-face with the seller and tour the facilities before making an offer, and these visits take time to set up.
Once the buyer and seller have entered into a preliminary purchase agreement, the buyer’s due diligence begins which can take from 30 – 60 days, and sometimes longer. During this time, the buyer will also be finalizing his financing and both parties’ attorneys/ advisors will be finalizing the purchase agreement and all of the related documents to “paper” the transaction. This typically requires a lot more time and effort than either party imagined.
Even after the deal closes, the buyer may require the seller to stay on in an employment/ consulting capacity for 6 months to several years.
Since this entire process can easily take up to a year or even longer, it’s a good idea to start planning at least 2-3 years in advance to prepare your business for sale, and select an experienced M&A advisor to assist in the process.
If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a free consultation with us, have them contact me, or any of the M&A professionals at www.bradwaygroup.com
By: Mike Ertel, Transworld M&A Advisors