How Long Will It Take To Sell My Business?
(updated 19th November 2023)
One of the first questions we get whenever we talk to potential clients about this is, "how long is this whole process going to take?"
And we get it - it’s a massive decision to sell your business and knowing typically how long the process is going to take can help when it comes to planning and understanding how it’s going to affect your day-to-day and personal life.
Here's what we've observed and what you should consider.
Crunching the numbers
On average, 70% to 80% of businesses we help find a new owner within a year of teaming up with us.
That's right, 12 months from shaking hands to popping the champagne.
Even better? A solid 30% of those wrap things up in just half that time. But keep in mind, your mileage may vary depending on a few factors.
But what are those factors? Let's dive in.
Which sectors sell the quickest?
Certain sectors in business are more attractive than others and are nearly always in demand. Here's a closer look at why:
IT, Managed Services & Cybersecurity
Every company, big or small, relies heavily on technology. Whether it's to manage their operations, store data, or connect with clients, the importance of IT can't be stressed enough.
But the tech world is evolving at lightning speed. For many businesses, rather than starting from scratch or trying to play catch-up, it's far more strategic to buy into an established IT, managed services or cybersecurity company that's already ahead of the curve and performing well.
Facilities Management & Commercial Cleaning
Every physical business space, be it an office, factory, or retail outlet, needs maintenance and cleaning.
And let's be honest, once a business finds a reliable service that understands its unique needs and operates without disrupting its day-to-day, they're reluctant to change.
That’s why newcomers often find the barriers to entry high. Acquiring an established player, with a roster of loyal clients, is often a quicker path to profitability.
Money management is critical, and for many businesses, outsourcing accounting makes more sense than managing it in-house.
Once a company has established a rapport with an accountancy firm, which understands its financial ins and outs, there's immense trust involved.
For new entrants, breaking this bond and winning over clients is no easy feat. That's where the allure of purchasing an established firm comes in.
This one's interesting. Unlike the others, precision engineering doesn’t necessarily have those consistent, locked-in contracts. But what they lack in regularity, they make up for in quality and trust.
Picture this: you're in the aerospace or automotive industry, and you need parts that fit exact specifications. You can't risk errors. So, once you find a precision engineering company that gets it right, you hang onto them for dear life.
For a new precision engineering firm, breaking into such a market can be daunting. Buying an established firm, known for its quality, is a far less risky move.
Which buyers act the quickest?
Of course, sellers are only one half of the deal here. When it comes to buyers, there are several “types” and each one comes with its pros and cons. Let’s take a look at a few of them.
The Ready-to-Go Buyer
This is the individual or company that's financially secure with plans to grow through acquisition. They have cash reserves and are on the lookout for the right opportunity.
For you, as the seller, this is the dream scenario. Why? It means a faster sale, fewer complications, and often a better price. The catch? They're rare, and they often know their worth.
So, if you stumble upon one, be prepared for negotiations but appreciate the smoothness they bring to the process.
The Careful Courter
This buyer sees the value in your business but might be a bit more meticulous in their approach. Picture someone who's interested but takes their time, ensuring they've ticked every box.
They might need to convince banks to get loans or have a board or team that needs convincing themselves.
While this approach can mean a longer process for you, it also often signifies their serious commitment.
Some buyers, especially larger institutional ones, often bring along big accountancy or consultancy firms when discussing business purchases. Why? They want to dive deep, very deep, into understanding your business.
They'll sift through financials, evaluate contracts, and analyse all the risks. While it can be somewhat nerve-wracking watching them dissect every element, it's also a testament to the value and potential they see in your business.
Yes, it'll take longer, but it also means they're ensuring everything's in place for a successful merger or takeover.
The need for clear, updated information
So having a certain type of business can speed things up, and finding a certain type of buyer can, too. But there’s something else to consider when it comes to the speed of transaction – information.
Having management accounts for the latest month each month and being able to respond to detail questions quickly will not only save time but will also give the buyer confidence that the business is well run.
If the information a buyer needs to know is clearly laid out in the Information Memorandum, the buyer will be able to make a clear decision about your business and whether it is right for them.
When it comes to due diligence, being prepared with all your contracts (clients, employees and suppliers) and articles of association to hand and up to date will avoid delays in the transaction process as well as reduce your legal costs.
Missing information? That will cause a delay and may derail the process.
The balancing act: patience vs. momentum
It can take some time to find the right buyer for your business in order to secure the best deal value and structure. And it is important that your business broker and M&A intermediary takes the time to turn over every stone to find this buyer.
However, keeping the momentum in a transaction is key to completing your sale successfully. Markets change, economies shift, and personal situations evolve.
Sometimes, waiting too long can mean missing out on a golden opportunity.
That’s where having a seasoned business broker by your side is so useful. We can help maintain the right pace, ensuring you get to a successful sale in good time.
And if that interests you, or you just want to chat about some of the information we’ve shared above, then feel free to get in touch with us using the contact form below or, if you prefer, you can give us a call on: 020 8090 9380.