How Long Does It Take To Sell A Small Business?

How Long Does It Take To Sell A Small Business? It is crucial to understand the entire small business sale process. Timing is often a key factor in the success or failure of a business sale.

Just as no two businesses are alike, selling a small business should be tailored to its specific needs. It is also important to let the process unfold. Sales that are closed too quickly tend to result in lower prices or terms.

How Long Does It Take To Sell A Small Business?

We answer the question “How Long Does It Take To Sell A Small Business?”

A typical business sale transaction takes between three months and a year. It is better to provide an overview of the sales process and the typical time it takes to complete each of the six stages.

  • Listing The Business
  • Marketing The Business
  • Meetings Between Principals & Agents
  • Negotiations & Contracting
  • Due Diligence
  • Escrow & Closing
How Long Does It Take To Sell A Small Business?

Stage 1: Listing The Business (2-4 weeks).

Preparing a business for sale usually takes between two and six weeks. Business brokers review key business documents and records to prepare the business for sale. The broker also prepares the business valuation.

The extent to which this data is easily accessible will have a significant impact on the time it takes to complete. It can take only a few weeks if the data is available and financials are organized well. If not, it may take longer.

Stage 2: Marketing the business (3 to 6 Months)

The selling of a business takes between three and six months. Your business broker will send a “blind profile” teaser to initiate the marketing phase. The brief introduction to your business is one- or two-page in length and does not reveal your identity. It’s used to attract and recruit potential buyers. Your business broker will help you buffer your inquiry to make sure that they have buyers sign a confidentiality agreement (NDA), before forwarding any information or other identifying information to the prospective buyer.

Buyer prospects will review the business information and then may request a conference call with the seller and their business broker. There may be several similar meetings if there are many interested buyers. Your business broker and you will then discuss and decide who you want to meet in person. Most sellers will meet with five to five potential buyers, depending on the number of interested parties.

Stage Three: Meetings Between Principals & Brokers (7-10 days)

These meetings can be held at your location or, in the event of a potential conflict with your staff members, offsite. The confidentiality requirement is something serious business buyers are aware of and will respect. Potential buyers use these meetings to get to know your business and talk about a potential transaction.

Stage Four: Negotiations & Contracting (2-6 weeks).

After the meetings with management, a serious buyer will issue an offer. Your business broker will assist you in this stage and help negotiate the best terms to sell your business. The broker will then draft up the purchase agreement and supplemental documentation and seek signatures from all involved parties.

Stage Five: Due Diligence (2-3 weeks)

After you have signed the contract for the sale of the business, a potential buyer will spend between four and six weeks conducting due diligence. This usually includes verification of all data received, inspections, securing financing and working through any glitches.

Stage Six: Escrow & Closing (4-12 weeks)

The escrow process, and loan underwriting can take 30-90 days depending on the complexities involved, how quickly parties respond to requests and various scheduling. If an SBA loan is involved,

What is the time frame for selling my business? It is rare that a business can be sold in three months or less. If it’s a cash purchase, then the process will not take as long.

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