It’s one of the first questions sellers ask, and the answer, as with all important questions, is “It depends.” Here’s my experience with timelines and how a seller can make the process easier and faster.

First, if you’re thinking about selling or retirement, get started right now. It’s never too early to meet with an experienced broker who can give you an opinion of value and advise you on what to do to increase your company’s value. We encourage clients to start the process 2-3 years before they’re ready to put it on the market.

The reason for that is that if your company’s current value isn’t the number you had in mind, you have a couple of years to make adjustments. You might need to increase sales or tighten operations. You might have to rethink your retirement strategy. The key is to know where you stand early enough that you can make the necessary changes.

You may need to clean up your financial records. Make sure your tax returns match your financial statements. Sometimes I come across sellers who categorize personal expenses as business expenses to minimize their tax liability. To maximize the value of your business, it’s crucial to discontinue this practice 2-3 years before listing it for sale. Collect copies of all the essential documents a buyer will want to examine, including leases, landlord agreements, and other legal documents. The more organized you are, the more quickly a buyer can make decisions.

Once the calendar clicks over to the year you’ll be making your exit, meet with your broker again. We’ll look at your financial statements (usually the last three years’ worth) and give you an opinion of what your company is worth in today’s market. That will be based on your profitability, sales of comparable companies within the last few months, and other intangible factors (such as brand reputation and management structure.) 

This is the time to disclose any issue that will affect the company’s value, including the skeletons in the closet if there are any. (Pending litigation, unpaid taxes, that sort of thing.) We know that they will come out in the discovery process, and if a buyer believes you’ve been withholding important information, it will harm the relationship, create distrust (which makes the diligence process even more prolonged) and perhaps even kill the deal. As long as you’re perceived as being forthright, we can work around problems in the business.

It only takes a couple of weeks to provide an opinion of value and determine a reasonable listing price as long as I receive all the documentation quickly and in good order. I don’t take listings that I’m not sure I can sell, so my promise to clients is that I can get an offer within 60 days of putting it on the market. I’ll be screening prospective buyers for financial suitability and fit with the company, so you may only meet a few prospects before you accept a preliminary offer.

With a Letter of Intent in hand and Non-Disclosure Agreements signed, the Due Diligence process begins. We can release financial information and respond to inquiries from the buyer and the lender. If the deal is financed through the SBA, the diligence process can take as long as 60 days, but if it’s a cash deal with some owner financing, we find it usually takes 14-21 days. The seller can help the process along with well-organized and timely responses to requests for information.

The more complicated the deal becomes, the longer the process will take. A broker’s job is to keep communication flowing and the deal moving so you can stay focused on running your company. That’s why having clean books and full disclosure is so critical. 

After the Due Diligence process, the buyer will put a deposit in escrow, and we’ll be working with lenders and other parties to close as soon as possible. My experience has been that most deals take between 4 – 7 months from listing to closing. 

For most owners, selling their business is a once-in-a-lifetime experience, and it makes sense to take the time to get it right. 

If I can help you understand the value of your company and how long it might take to sell it, click here for a complimentary and confidential opinion of value.