One of the most common questions we receive at Jamieson Law is: “How long does it take to sell a business?” The answer can vary widely depending on numerous factors. We’ve previously described the steps involved in selling a business, which you can read more about here. In this article we’ll recap those and provide more insights on the timeframes you can expect.
Typical Timeline for Selling a Business
Preparation phase: 3-6 Months
We’ve talked about this phase extensively before and we’ve written a great article on how to prepare to sell your business, which you can read more about here. Before you list your business for sale, you need to have prepared for the sale well. Very often, how long it takes to sell a business stems from this initial phase and how thorough you can be. In most instances, this preparation phase can take anywhere from 3 to 6 months and includes:
- Business valuation: Determining the value of your business through a professional valuation.
- Financial preparation: Organising financial statements, tax returns, and other relevant documents.
- Legal readiness: Ensuring all legal aspects are in order, such as contracts, leases, and intellectual property rights.
- Marketing strategy: Developing a plan to market your business to potential buyers.
Finding a buyer: 6-12 Months
Okay, you’ve done the hard work and got everything you need in place. Now you need to find your buyer. Finding the right buyer can take another 6 to 12 months and can be helped by using a business broker or introducer. This phase involves:
- Listing the business: Marketing your business through various channels, often with the help of a business broker.
- Screening buyers: Evaluating potential buyers to ensure they have the financial capability and genuine interest in purchasing your business.
- Initial negotiations: Engaging in preliminary discussions to gauge buyer interest and compatibility.
Due diligence and negotiations: 3-6 Months
Great, you’ve found a serious buyer, now you move into the next phase of business show and tell. The due diligence and negotiation phase typically takes 3 to 6 months. This includes:
- Due diligence: Allowing the buyer to thoroughly examine your business’s financials, operations, legal status, and other critical areas.
- Negotiating terms: Discussing and agreeing on the sale price, payment structure, and other key terms.
- Letter of Intent (LOI): Drafting and signing a non-binding LOI to outline the agreed terms and conditions.
Finalising the sale: 1-3 Months
You’re now into the home straight, it’s nearly time to celebrate but you’ll need to stay focussed for another 1 to 3 months to finalise the sale which includes:
- Drafting the sale agreement: Your legal team will draft the Sale and Purchase Agreement (SPA) based on the agreed terms.
- Closing the deal: Both parties will sign the SPA, and the ownership of the business will be transferred.
- Receiving payment: Ensuring that the payment is made as per the agreed terms, which could involve an upfront payment, instalments, or other structured payments.
Factors Influencing the Timeline
To answer the question ‘How Long Does It Take to Sell a Business?’ all of the above needs to be taken into consideration and there are additional factors that will also influence the speed at which you’re able move:
Type and size of the business:
- Larger businesses with complex operations and multiple stakeholders may take longer to sell compared to smaller, simpler businesses. Similarly, businesses in niche markets might require more time to find suitable buyers. Jamieson Law has worked with founders who have sold their business in a matter of weeks and have worked on business sales that have taken a year to complete, it really is specific to each circumstance.
Market conditions:
- Economic conditions and market trends can significantly impact the timeline. In a strong market, businesses may sell faster due to higher demand. Conversely, during economic downturns, the process might take longer.
Business preparation:
- How well-prepared your business is for sale can influence the timeline. Businesses with organised financials, clear legal status, and a solid marketing strategy are likely to attract buyers more quickly.
Buyer financing:
- The time it takes for a buyer to secure financing can also affect the timeline. Delays in obtaining loans or investor backing can prolong the process and this is vital to understand as you too carry out your due diligence on a potential buyer.
Negotiation complexity:
- The complexity of negotiations, including the terms of the sale and any contingencies, can impact the timeline. Extensive negotiations and due diligence processes may lengthen the sale duration.
Selling your business is a journey that requires patience and careful planning. If you’re considering selling your business, get in touch with Jamieson Law today for a free 15min no obligation discovery call. Our team of experts is here to guide you through every step of the process. Contact us at 03308 184 248 or fill in the contact form HERE to get started.
