With so much on the line, timing plays a major role in the sale of any business.
So, how long can you reasonably expect the sale of your business to take? In addition, this video will also lay out the steps required to successfully sell your business, from the valuation process to legal implications you need to consider, and the different schedules required to make it all happen.
Want to learn more about how Molliter Advisory can help you with the sale of your business? See our M&A services.
Transcript for “How Long Does It Take to Sell a Business?”:
You know, it’s a funny thing when these large financial crises happen and giant institutions change hands in a matter of weeks. That doesn’t occur with private businesses.
This is a nine month, at best, curve. There’s so much that needs to be prepared for the purchase. There are so many people who bring money and protections against things that could happen if a deal goes sour, you know, to getting that deal done correctly.
It takes a lot of time to prepare that. Every transaction has several steps, and they don’t occur simultaneously. There’s a valuation process. You need to understand how other people are going to perceive the value of your company.
Therefore, someone needs to come in and run the same models that everyone else is going to run. It’s going to take some time.
There are legal things that just come up that you wouldn’t consider. What if there’s an environmental test that needs to be taken for the property under which your factory stands. That could hold you up for a couple of weeks, sometimes months, especially if something weird shows up there that you didn’t expect.
There are aspects that occur as far as making your processes, your company saleable.
Now, there’s a lot of debate on if you need to front-load that, or if you just need to prepare the buyer for the shortcomings. But that does take time. There’s something called the “Definitive Agreement,” which has plenty of schedules.
Just getting the schedules done sometimes can take two or three months. Each one of those schedules is a testament that it is what it is. You’re saying that, to your knowledge, these things either have occurred or have not occurred. And if you’re wrong, there’s a draw on escrow.
Making sure that you’ve got the right answers to each of those schedule questions can get very time-consuming.