Given that it is not really a seller’s market at the moment – and rarely is – the amount of time you need to set aside before being able to sell it may be longer than you might want. Having said that, some businesses can find a potential buyer rapidly and then proceed to an acquisition with a stunning degree of ease. These cases tend to be the exception rather than the rule, so it is better to be realistic.
Indeed, the average time for a business to actually sell should be thought of as much as nine months. Ultimately, the best advice you can have when consi dering business sale timescales is that it is a mid-term project at least. When selling up your going concern, there are some timing questions that you should ask of yourself and the business.
It is widely accepted that finding a potential buyer for many sorts of business could range from a few weeks to a few months on average. However, this is only securing interest – not doing the whole deal. Once negotiations are entered into, more time is often needed, especially where sales clauses are entered surrounding handover periods and so on. As mentioned, the mean average is a full three quarters of a year, but this figure can vary wildly. Nevertheless, a typical business sale is still much longer than most people account for.
Given that people sell businesses for a wide number of reasons, from realising their equity to problems of ill health, there is no telling how much mental commitment any individual might have for a business sale. Ask yourself whether you have the energy and enthusiasm for seeing a sale through from start to end.
Maybe you have higher priorities, such as getting on with retirement or the desire to get on an begin a new venture? Perhaps you are looking to sell a proportion of your business in order to raise development capital? Whichever is your priority, remember that instructing a sale advisor to proceed with sale can speed things up and it also takes some of the stress off. Professional advisors can drive a business sale from beginning to end. As such, the sale process won’t run out of steam if you do, or if you need to concentrate on other things.
The fact of the matter is that it is possible to beat the average sale time for a business. Firstly, this means ensuing your business is not one of the 70 per cent which go on to the market never to be sold. Making your business as attractive as possible to potential buyers will be key to this. If you have a genuinely attractive customer proposition, then it is possible to sell your enterprise in a matter of just a few months, or even less. Although rare, it is certainly possible with the right professional advice.
Ideally, you will be advised on how to diversify your customer offering so that your business is seen as more stable to potential buyers. Having an even spread of clients is essential for a quicker sale. In addition, you should learn how to make your business less owner-focussed, that is more of a brand in its own right with a committed team behind it which can clearly continue to thrive without your personality driving it. Consider the fact that most buyers want a business that isn’t wholly dependent on the owner to steer it and also sort out supplier and customer issues in advance so that you will increase the chances of selling speedily when the business is put on the market.
Another factor, albeit a less important one, will be the business sector you operate in. Some areas of the economy achieve more successful business sales than others. However, this is where a sales advisor can be invaluable by offering help with how to market your business, no matter which sector it is in. Not only do they help you to be prompt with all of the requested business information that might be asked for, they help to market your business to more potential buyers in the first place. Finally, they’ll help you to make as many wise commercial decisions as you can to fully prepare the business for sale.
Of course, once a business is up for sale, finding a buyer and moving on to the negotiation stage is desirable. However, not all business owners are in a situation where they need to rush forwards. The longer you take, the more detail can be covered. If you are in a rush to sell, then this can mean you risk selling your company at a lower price than you might otherwise achieve and, crucially, with less favourable terms overall.
Bear in mind that selling an enterprise is something of a numbers game. By taking longer over it, sellers give themselves the best chance of maximising their business’ sale potential. An increased number of potential buyers is reached the longer time is given to a sale. This can even result in multiple offers and bids being achieved.
Taking more time also means being able to be more diligent. This might mean that your marketing documents for the sale are fully prepared and are therefore able to show your business in the best light, for example. It will also allow enough time to adequately prepare the accounts. With sufficient time, business principals can go through all of the figures carefully with their appointed sales advisor. This often results in an improved ability to deal with the sort of tough financial questions that are frequently asked at the negotiation stage and for due diligence.
Many entrepreneurs think about selling their business only a few months in advance. However, preparing for a sale years in advance is preferable, certainly when it comes to ensuring a prompt sale with favourable terms. Ask yourself when you think it might be good time to start planning your business exit. Perhaps it will be once expansion plans are finalised. Perhaps it will be when you would like to retire. Perhaps it will be when a new business opportunity comes your way. It is different for every individual. However, what doesn’t differ is the fact that healthy and attractive businesses will sell faster on average, so getting ready for a sale over as long a period as possible is always desirable.
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