How Long Does It Take To Sell A Large Company?
Are you looking to sell your large company? If so, you may wonder, how long does it take to sell a large company? Fret not, because we have the answer!
How long does it take to sell a large company?
Are you interested in selling your business? How long does it take to sell a large company? We have worked with clients with $1 million to $25 million in revenue in various industries, including landscaping, pest control, manufacturing, distribution, and distribution. We have found that it takes between 6 and 11 months to sell your business.
Selling your business can be exciting, nerve-racking, and emotional. Owners should be proactive and explore all options before selling their business. Some businesses sell in six months or less, while others never sell at any point.
The timeline for selling your business will give you an idea of the time it will take. However, there are many other factors that could impact the speed and success of the sale process. This will help you to determine how you can make the sale of your business successful and quick.
Six factors that affect the sale of your business
1. The selling price of your business
In general, the higher the selling price of your business, the longer it will take for it to sell. The higher the cost, the fewer qualified buyers you will have. This is because fewer buyers will be able to afford your business if the value is higher.
The sale price of your company will determine which buyer you work with. Each buyer is different and will have their own selling criteria.
2. The type of buyer you are dealing with
Every buyer is different. Some buyers will require more time for due diligence, while others may need to wait longer before securing financing. These are the types of buyers that you will encounter and how they will impact your selling timeline:
Individual buyers. These buyers are the most common. These buyers will typically apply for an SBA7(a) loan to finance their purchase. The approval process for the loan can take between 45-90 days. Despite the lengthy approval process, selling to an individual buyer may take less time than selling to another type of buyer.
Private equity groups. These buyers tend to be sophisticated and have full teams that include analysts who assess acquisition opportunities. They are very knowledgeable and will ask many questions which can prolong the due diligence period. Their financing times are short.
Strategic buyers. These are business owners in the same industry as yours who are looking to build a business or expand their market. Although they will be knowledgeable about your industry, due diligence may take longer due to regulatory approvals and corporate compliance.
The goal of the merger and acquisition is to buy a complementary business that will work in synergy with their existing company. A post-merger integration plan is crucial for the success of a sale to a strategic buyer.
PEGs and strategic buyers have the longest due diligence periods of any buyer type, but your results may vary depending on which group you choose.
3. The industry in which your business operates
The appeal of your business will depend on its industry and profitability. Home service businesses with recurring revenue are a good example of an industry that buyers find attractive because it offers a steady revenue stream.
However, if you have a home care business that requires licensing, this can affect the timeline for selling your business. Before the sale can proceed, individual buyers might need to spend some time getting the appropriate licensing.
Private equity groups and strategic buyers might have the right licensing if they are involved in a similar business. However, there is still the possibility that a strategic buyer or private equity group will need to go through licensing.
4. Where your business is located
The location of your business can also impact its marketability to buyers. Attractive locations include emerging cities like Raleigh or resort areas such as Wilmington and the Outer Banks.
Potential buyers may be moving to the area where your company is located. This makes buying your company a great opportunity due to its financial and lifestyle aspects. The possibility of organic growth may appeal to a buyer if your business is located near a growing city.
5. The structure of your business
How your business structure is organized will determine how involved you are in daily operations, how efficient your processes are, as well as how you manage your finances. Your business will be more appealing to buyers if the following statements are true:
- You are now removed from the day-to-day operations of your business.
- With operations manuals, you have simplified processes in your company.
- You have access to detailed financial information which can be accessed quickly.
Potential buyers can be put off if you are too involved in the day-to-day operations of your company or if your processes are not up-to-date and efficient.
Buyers are looking for businesses they can easily acquire and start running. Buyers will appreciate your company’s ability to imagine themselves as your owners, and it will be less risky.
6. How you provide company information to business brokers and buyers
It is possible to speed up the selling process by quickly providing information to all parties. The faster a buyer or broker can review your company information, the quicker the process will go. You should prepare the following information ahead of time:
- Lease agreements
- A list of utilities
- Social media accounts
- Standard operating procedures
- Operation manual
A broker will require financial information that includes three years of tax returns, P&Ls, balance sheets, and an age report of your receivables. This information can be prepared for business brokers. However, it is important to consider your ideal sale.
A clearer understanding of your goals will help the broker find more qualified buyers for your business.
You should imagine this picture in your head, but you should be open to the possibility that certain details may need to be changed depending on the buyer.
We hope that this article has put your mind at ease because now you how long does it take to sell a large company.