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How Long Does it Take to Sell a Business?

Thursday, April 18, 2019 · 0 Comments

 

 

As a business owner who is looking to exit their business they often ask the question, "How Long Does it Take to Sell a Business?" 

If you speak to business brokers and industry leaders they will say it takes 6-9 months to sell a business on average. This is a statistic based on the businesses that actually do sell. There are also worrying statistics that state 80% of all businesses that hit the marketplace don't actually sell. The ABS reported in 2018 said that, of the 2,313,291 businesses in Australia there was a 12.5% exit rate (about 289,000 Businesses) So you need to prepared for the time it can take to sell a business and to be aware that not all businesses sell - which is why it is important to receive professional advice and to be prepared. 

 

Why is it hard to get specific statistics on Business Sales?

When a business owners exits their business it may be via a sale on the open marketplace, a merger and acquisition, transfer to a family member or closure. Unlike real estate which requires the sale of property to be registered, business sale transfers are not registered in the same manner so the statistics is a lot harder to track. The majority of statistics are from Business Brokers or the AIBB which is the Australian Institute of Business Brokers. These statistics are based on listings that brokers have taken on as clients and have tracked through to the sale and completion. There are alot of businesses sold privately or through a merger that are not included in these statistics. 

 

What causes a variation in the time frame?

One the biggest causes in variation is how well prepared the business owner is when it comes time to sell. The more prepared and the more realistic the owner is with the price they are setting can affect the duration the business will be on the market. Obviously, there are many other factors involved as well, such as; type of business they are selling, the potential buyers available, finance availability, the marketing and exposure and so on. 

 

How long does it take to 'close the deal'?

Industry professionals say it takes 2-3 months for a potential buyer to perform due diligence and source finance. So once you have a buyer lined up, you need to be prepared for the time it takes for them to engage their own professionals to perform due diligence. It's important to note with tighter bank restrictions on lending, that many loan requests are falling through, so even if you have a buyer lined up, financing could be an issue. So its a good idea to keep your advertising active until the settlement has occured. 

 

So how can I find out how long it will take to sell 'MY' business?

The best approach would be to ask local business brokers their opinions. Then to increase your chances of selling quickly by having everything prepared. You will need to have a solid exit strategy in place, legal documents for the sale, marketing materials, training documents and more. We have a prepared a guide to assist sellers. Please see our 6 Steps to Prepare a Business For Sale. 

 

 

 

 

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