There are so many reasons- personal or otherwise- why founders sell their businesses. However, one of the most recurrent questions when this happens is — how long does it take to sell a business? This question does not have a simple and straight forward answer given the complexity of variables affecting various industries, countries and business environments. Therefore, the length of time taken to sell a business varies from one business and period to another. However, on average, it takes between 6 to 12 months for businesses in various industries. We take a look at the factors affecting the length of time taken to sell a business and what founders can do to speed up the process.
Popularity of the industry or business
In practice, some businesses and industries will be more popular than others. Businesses in the prevailing popular industries may even receive offers despite not being on sale. The popularity of businesses varies from period to period and is usually dictated by prevailing market conditions. However, business owners can increase the popularity of their businesses by adopting new modes of operation, instituting new product lines, hiring unique and talented employees and adopting new technologies.
The business sale strategy
The business strategy used to sell the business no only dictates the final pay out but also the length of time it will take to find a suitable buyer. Are you selling it alone or with the help of a business broker? Business brokers understand the market dynamics, have different strategies to attract investors, have the skills and experience to close the deal fast enough and are therefore more likely to close the deal faster. If you are planning on selling your business, it is advisable to identify a reputable business broker to work with to speed up the process.
The asking price
This can either attract or push away potential investors. The asking price must be relative to:
- the size of the business,
- the prevailing market conditions,
- the assets owned by the business,
- its market share,
- the stability of operations,
- transferability of the business,
- the liquidity of the business,
- the value of similar businesses
- and the industry of operation.
As you value your business, ensure that you take all these factors into consideration, work closely with a valuation expert and ultimately come up with the correct valuation.
Marketing efforts
When a founder is selling their business, the turn around time is dependent on the extent of marketing efforts. The greater the efforts, the faster the business will be sold. Founders can also use a combination of different marketing strategies to enhance the speed of sale. You can employ these strategies:
- Digital marketing,
- listing the business in different directories,
- using reputable brokers,
- use of print media
- and word of mouth where applicable.
The extent to which the business is ready for acquisition
Investors are more interested in businesses that have a solid structure, proper documentation, have healthy financials, great management teams, are easily transferable and whose risk base can easily be mitigated. If your business does not fit this profile its time to get to work to enhance its readiness for acquisition. Businesses that may not be ready for acquisition also tend to fetch lower prices in the market incentivising you to make it as attractive as possible.
Availability of buyer financing options
Purchasing an established, stable and profitable businesses that has a projected upward trajectory is a capital intensive affair irrespective of whether the acquirer is an individual or organization. This implies that it may take a while to mobilize the funds required which essentially delays the sale. However, as a seller you can approach different financiers and negotiate possible financing options for the purchaser. For the financing options to be acceptable, the interest rates must be competitive relative to market rates. And the terms and conditions must be favorable to the organization or individual acquiring your business. By organizing these financing options, once a deal has been negotiated, the funds are availed within the shortest time possible.
Other factors that may affect the speed of sale include whether its a Sellers’ or Buyers’ market, your negotiation skills, whether, as a founder, you plan to stay on, the value addition to the buyer upon purchase of the business and the projected business statistics. Despite this, you can now come up with realistic expectations on the sale as well as identify how you can speed up the process. However, it is good to note that this guide does not substitute the use of experts and only aims to complement your knowledge on the field.
- François Borgel 1887 Genève: Swiss Watchmaker Welcomes American Investor with Minority Stake Acquisition - February 20, 2025
- Photovoltaic, MergersCorp, and Unoenergy IS sign partnership - February 15, 2025
- The World Economic Forum in Davos: Implications for Mergers and Acquisitions - January 24, 2025
