Business for Sale: How Long Does It Take to Sell?
Arizona Business Broker Explains How Long It Takes To Sell A Business
Once you decide to sell your business, you may be in a hurry to get it done as quickly as possible because financial difficulties or family issues have arisen, creating some urgency behind the sale. Unfortunately, the process may take longer than you would like.
The data shows that on average, a business takes six to ten months to sell. Of course, there are many factors that can influence how long it will take. When you work with an experienced Phoenix business broker, you’ll learn how these and other factors can expedite your sale:
Business Asking Price
Typically, the lower your business is priced, the faster it is going to sell. However, most sellers are most interested in getting the most money possible for their business. After all, they have invested quite a lot of time, money, and sleepless nights into starting and growing that business.
You need to find the right price to balance your need to get the most money with your desire to sell your business as quickly as possible. Know that if you do have a higher asking price, you’ll need to accept that it usually will take a little longer to sell. Buyers who have the means to purchase more expensive businesses are going to request longer due diligence periods to ensure that the business is worth the investment.
Desirability refers not just to your business and whether it has long-term profitability, but also to the type of industry that your business is in and its location. Phoenix, as a whole, is a hot area for business and for relocation, so that is already going to help your business sell more quickly. Your business broker can help you understand where your business stands in terms of desirability and can help you understand how to improve its desirability, if possible.
Type of Buyer
The type of buyer that your business attracts will greatly influence how long it takes to sell. Generally, there are three types of business buyers: Individuals, strategic buyers, and private equity groups.
Individual buyers will usually complete a sale the fastest. Their due diligence period is usually only about 2-3 weeks. The one thing that can extend the period of time from an offer to the closing is if they need to get an SBA loan to purchase the business. It can take 45 to 90 days to get an SBA loan funded.
Strategic buyers (Companies already in your industry) fall somewhere in the middle for buying time. You can help speed up the sale with these kinds of buyers by having all the right documentation ready for review, including a detailed integration plan. Your certified Phoenix business intermediary will help you identify the right documentation to help speed up these sales.
Private equity groups tend to take the longest to complete a sale. However, these groups will move on your business quickly if it is part of a larger roll-up, where the business is being consolidated into one the group already owns. The sale will take longer if the group is considering your business as part of a new venture (Platform Company). Their due diligence period is usually about 4-8 weeks.
Not everyone can afford to pay your asking price outright in cash. In fact, few can. So unless you plan to carry a portion of the sales price in the form of a Seller Carry Note, you need to be prepared to wait for them to get their financing approved. What type of financing the buyer is trying to get will influence the timeline. Your business broker can help you know what to expect.
Say you were away from your business for several months. Would the business come to a halt? Would day-to-day operations fall apart? If the answer is “yes” or “likely,” your business is going to take longer to sell. Businesses that are structured to be more independent of the owner and have some management in place will sell faster.
Your Phoenix business broker will counsel you on how the structure of your business may affect its sale. If there are changes you can make ahead of the sale, the broker will let you know.
When you decide to sell your company, the best thing you can do to sell it faster is to consult with an experienced business broker. The broker will help you get the best price for your business, get it ready for sale, and market it properly to ensure you get a sale as fast as possible.
Phil Reese is a top Phoenix business broker, and he is ready to help you sell your Phoenix area business. Phil Reese is a Certified Business Intermediary (CBI) who has been helping business owners and buyers come together since 2001. He has also started and operated several businesses of his own. He has the background, skills, and education to help you get the most money possible out of your business sale. Call his office today to learn how he can help sell your Phoenix business.
Written By: Phil Reese
Phil Reese – Arizona Business Broker
7077 E. Marilyn Road, Bldg. 4 Suite 200
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