How long does it take to sell a business? Well, it depends. We hate answering, “it depends” but it does. As business brokers, our clients ask this very question and often. How do you expedite the potential sale of your business? First and foremost, your financial statements must be up-to-date and hopefully, you have kept meticulous financial statements and records from day one. As a business owner, you should have constant contact with your CPA.
Infrequent phone contact with your CPA will not prepare you for a quick, seamless sale. Bookkeeping done monthly and along with reconciliations will put your business in a position that ensures it attracts the highest possible offers. Using an accountant is very important however, being able to run reports for your monthly P&L’s, Balance sheets, etc. is all very easy and should be something you are doing anyway. It’s the same as your home finance, you have to keep an accurate summary of how much revenue vs expenses at any given time. Small business owners often exhibit a great sense of urgency to close a deal once they have made the decision to sell. But as experience points out, the process of selling a business typically takes at least six to nine months – a timeline that most owners do not anticipate.
In fact, a separate survey on the selling process found that nearly half (44 percent) of owners believed the entire sales process would be finalized in less than five months. However, most brokers generally don’t agree with this timeline, almost all brokers say sellers should set their expectations for days on market in the range of six to 11 months.
What is your CPA or CFO doing for you?
Pay the professionals to manage your books and give you solid financial advice. When a potential buyer looks at your books, there is little to worry about unless there are “other” entries. Quite frankly, have everything explained upfront regarding your expenses. Be transparent and truthful.
Now, to the question, “how long will it take to sell a business?” As a business owner, you will meet with our company at Valhalla Brokers and we’ll get to know each other. You tell your story; we’ll tell ours. If there is chemistry, we will proceed and look at your financials. If we like what we see and you or your financial rep can answer our questions about your finances, we will come up with a valuation usually within a couple of days or sooner of the initial meeting. We will draft a listing agreement that initiates a marketing package, valuation and terms of the sale.
Your company is placed on various business listing websites. We share your company info with our private equity groups and numerous private investors. We vet different interested parties to make sure they are a good fit. If both parties are interested, further analysis is completed. After detailed review, typically, an offer or LOI (letter of intent) is tendered. After typically 30 days of due diligence, follow-up meetings with you and the prospective buyer(s), attorneys and bankers are conducted to finalize the transaction with an Asset Purchase Agreement (binding contract to sell). Though luck and good timing can lead to a faster closing, accelerating the purchase usually isn’t possible. That’s why it’s critical for sellers to be prepared for a lengthy process before even putting their business on the market.
Our team at Valhalla Brokers has experience from the initial meet-and-greet to closing the transaction. We are working for you with your best interests at hand. From the initial discovery meeting to due diligence to completing the transaction, most transactions take approximately 6-9 months. And most importantly, we don’t get paid until you receive a check from the buyer!
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