One of the biggest mistakes owners make when selling a company is underestimating how long it will take. More than half of all sellers assume they can sell a business in five months or less. In reality, it can take between nine months and several years to sell a business.
Keeping reading now to learn what factors influence how fast a business sells and what you can do to prepare your business for a speedy sale.
Average Sale Times
Not all businesses take the same amount of time to sell.
About 28 percent of businesses sell in around six months. Another 31 percent take around nine months. About 20 percent of businesses take a full year to sell, and the remaining 10 percent can spend up to four or more years on the market.
These figures can help owners recalibrate their expectations, but they only go so far. What makes one business sell fast while another lingers on the market?
Factors That Influence the Speed of Business Sales
A wide variety of factors influence how long it takes to sell a business. Chief among these are:
- The type of business and what industry it’s in
- Where the business is located
- How complex the business is
- How much financial analysis is required for buyers to feel comfortable with the sale
- What kind of buyers the seller is courting
- How much financing prospective buyers need
- The business’s price point
Businesses that have their financial houses in order, clear and easy to follow books, and a solid, accurate valuation tend to take much less time to sell than businesses that don’t. The more time potential buyers need to spend on due diligence, the longer a sale will take.
Similarly, businesses that are overpriced can take years to sell. In part, this is because buyers get hung up on due diligence and valuation. They can also run into trouble with financing, as no lender will give buyers a loan to purchase a company for more than it’s worth.
Types of Buyers
Individual buyers tend to move most quickly when closing a business sale. That said, they can face months of delays while waiting for financing approval.
Private equity groups take longer to close a sale than individual buyers. If they are purchasing a business similar to one they already own, however, the sale may move along at a decent pace. They may be more cautious when buying businesses in industries they are less familiar with.
Strategic buyers tend to do the most due diligence and, as a result, often take the longest to buy during a company sale.
How to Keep Some Control of Timing When You Sell a Business
Fortunately, sellers are not without control when it comes to the timeline of selling a business. There are plenty of steps you can take to help sell your business fast. Doing your homework on these steps and investing in them ahead of time can save you months or even years of stress in the selling process.
How Long Does It Take to Sell a Business?
Like so many things in the business world, there’s no single answer to the question of how long it takes to sell a business. But by putting your house in order and educating yourself on the sale process, you can minimize the time involved when you’re ready to sell. Check out our great finance-related articles for more, today.