How Long Does It Take to Sell A Business?

Understanding the Business Sale Timeline: A Guide for Sellers

A common question we receive from business owners is how long will the sales process take when I’m ready to exit? This is an important question as often, there are significant plans that hinge on the successful sale of your business.

Selling a business is not an everyday task for most, and finding reliable, clear information on the process can be challenging. Fortunately, as an experienced business broker in Chicago, I navigate these waters daily, helping sellers understand and manage the complexities of selling their business - Helpful Article for Sellers (Why hiring a business broker is a smart move).

Typical Phases of Selling a Business

While each sale is unique, there are common stages most business sales will go through. Even if your specific situation varies, the following framework provides a reliable roadmap and will answer questions you have on “How long does it take to sell a business?”

1. Preparation Phase (1-2 Months) Before going to market, it's crucial to organize and prepare your business for sale. This involves gathering all necessary documents and information to create a compelling and comprehensive business valuation. Working with a knowledgeable broker, like myself at Playbook Advisory, ensures your business is presented to potential buyers in the best light possible, increasing its attractiveness and potential value.

2. Marketing Phase (3 Months) This phase is where your broker's expertise becomes invaluable. I use a proactive approach, leveraging both existing connections and actively seeking out new potential buyers. We start by confidentially marketing the business and secure NDA’s to protect privacy. Once signed the buyer will receive confidential data for your business. If the business is a good match we will encourage a face to face meeting with the buyer (Best Practices for business buyers when meeting with prospective sellers). The ultimate goal during this phase is to secure Letters of Intent (LOIs) from interested parties. It's important during this time to keep communication open with your broker and continue focusing on running your business efficiently.

3. Due Diligence-Closing Phase (3 Months) The closing stage can be both exciting and nerve-wracking. This period involves final negotiations and due diligence. I support my clients through this phase by setting up data rooms, scheduling status calls, monitoring the legal issues that the parties are negotiating and finally navigating complex emotions from all the participating participants. The goal is to ensure a smooth process that aligns with current market conditions and potential financing structures.

4. Transition Period (1-3 Months) After the sale, a transition period helps ensure the ongoing success of the business under new ownership. This stage is crucial for transferring not just the tangible assets but also the goodwill you've built over the years. It often involves training the new owner and making introductions to key stakeholders. Typically, sellers remain involved to some extent during this period, which helps mitigate risks and supports the new owner's success.

Factors Influencing the Sale Timeline

• Price Expectations: Realistic pricing can significantly accelerate the sale process.

• Geographic Location: Businesses in high-growth or densely populated areas often sell faster.

• Flexibility on Terms: Sellers open to flexible terms typically close deals quicker.

• Industry Dynamics: High-growth and popular industries see quicker sales.

• Effective Marketing: Strong marketing strategies lead to faster sales.

• Financial Trends: Positive financial trends in the business can expedite the sale.

• Seller Preparation: Well-prepared sellers can move through the sale process more swiftly.

• Buyer Pool: A larger pool of potential buyers can reduce the time on the market.