Selling a business | 4 min read
On average in Australia it takes six to nine months to sell a business. But why does it take so long and what you can do to sell your business as quickly as possible for the price you want?
Why does it take so long to sell a business?
The time it takes to sell a business is impacted by events on both the seller and buyer side.
For sellers, the sales process includes a number of steps that each take a significant amount of time.
- Preparation, 1 month. To prepare your business for sale you’ll need to dig out all your financial records, commercial information, legal details, operational and forecasting documents. These will support interested buyers with their due diligence and help you work out your asking price.
- Marketing and screening, 1-12 months. While getting a ‘for sale’ ad online can take less than a few hours, identifying, talking to, meeting with and screening interested buyers generally takes months. Finding just the right buyer for your business is often a waiting game and for businesses in niche industries or locations, getting enquiries can take a while.
- Negotiation, due diligence and closing, 1-3 months. The timing here is most affected by how well organised your documents are, the skills of your team of professionals, the urgency of the buyer and what you agree to during negotiations (like how long you’ll spend in the business after the sale).
Once they’re ready, most buyers will take some time to understand the overall business for sale marketplace and the opportunities available. Then, they’ll thoroughly research individual businesses before making an enquiry. They may do this on multiple businesses at the same time.
When they get to the enquiry stage, they’ll want to find out as much information as they can and figure out if the business is a good fit. Carrying out due diligence and securing finance or a business partner can also take a significant chunk of time.
How can you reduce the time it takes to sell your business?
The more organised you are, the smoother the process will be and the less likely it will be that it’s you holding up the sale.
To sell your business as quickly as possible:
- Set a realistic asking price. Businesses with an unrealistic asking price typically take longer to find a buyer. If your business is priced too high, it may not receive any interest and you’ll eventually have to lower the price which isn’t a good look in market.
- Have your documents ready. Putting the time in to organise your documents before you start advertising will help you with every other step of the sale. The information you gather can help give you an accurate valuation, the right details to advertise your business and the paperwork buyers need to complete their due diligence.
- Prepare for the handover. You’ll need to transfer your leases, permits and licences, tell your staff, finalise your tax and financials, and cancel your ABN. Many of the transfer forms for these can be prepared in advance and just submitted when the sale goes through. Preparing things like manuals, schedules or marketing plans before you find a new owner will also ensure you’re not stuck doing these after a contract is signed.
- Compromise during contract negotiations. Focusing on getting the best outcome for your business sale, rather than on “winning” will help you reach an agreement with the buyer more quickly. In other words, you’ll need to be prepared to negotiate and even compromise. If you don’t let minor issues slow down the process you’ll get a faster sale.
- Keep advertising your business. If you prematurely take your business off the market and the sale falls through, you’ll need to advertise it again which will just add more time to the process. While it’s easy to get excited and think you’ve found a buyer, remember an offer is just an offer and until the paperwork has been lodged, nothing is official.
Ultimately, it’s tough to speed up a business sale and there are many variables that will affect how long it takes. If you’re prepared and set realistic expectations you’ll be in the best position to sell as quickly as possible and ensure you’re not doing anything to slow down the sale.
Wondering what else you should consider when selling? Check out our ultimate guide on how to sell a business.