By the time most business owners engage an investment bank to sell their business, they are eager to move onto their next venture. Selling a business demands precision, though, especially when owners must evaluate multiple offers and weigh whether those offers align with their future goals or retirement plans. Most data sources suggest that it takes 6 to 9 months to sell a business. This is just an average, however, and provides no information about what any individual owner can expect. Some businesses sell literally overnight. Others languish on the market for years, ultimately to walk away from M&A entirely—or suddenly get lucky with a great offer. This unpredictability is why it is so critical to work with a skilled investment bank that can offer sell-side support.
So how long will it really take to sell a company? These are the factors that matter most.
Exit Planning and Sale Preparedness
Exit planning is the stage of M&A over which owners have the most control. Investing more time and effort in this phase can increase the odds of a successful sale, and shorten the length of each subsequent chapter of the process. The main factor affecting the length of exit planning is the willingness of the buyer to invest time in sale preparedness. It may take more time to fully prepare if:
- There are issues with the company’s operations, finances, or staffing.
- The owner has not maintained good records.
- The owner opts to do it themselves rather than hire an M&A firm.
- Economic factors are not favorable in the wider economy or the sector in which the company operates.
- The seller is not emotionally prepared to sell their company, or is not fully committed to the process.
Marketing the Company
Marketing a company is unpredictable. It can take moments to create a bidding war for the right company. Or it can take months. Well-run companies with excellent reputations tend to attract the best buyers. Some factors that influence how long this stage takes include:
- The marketing strategy.
- Whether the company is a niche business that requires special acumen to run. Niche businesses often take a bit longer to market.
- The market in which the company operates, as well as the wider M&A market. Good economies are good for M&A.
- How well the company is performing—both in reality, and in the perceptions of potential buyers.
For most owners, the most arduous part of selling a company occurs after the parties sign a purchase agreement. Due diligence can be a taxing process that requires significant paperwork and a massive time commitment. Owners who work with an exit planning team prior to putting their company on the market, however, are at an advantage because they’ll already have the documentation they need.
Some factors that will determine how long this period takes include:
- How responsive the owner is to due diligence requests.
- Whether there are any unpleasant surprises prior to closing.
- Funding issues on the buy-side.
- Negotiations. The right sell-side advisor can lend professional credibility to the process to help it go more smoothly.
Sell-side support from an investment bank to help take exit planning, marketing and pre-closing preparation into account makes all the difference to the amount of time it takes to sell a business.