Selling a business is a complex process that can take anywhere from six months to over a year, depending on various factors like industry, location, and business size.
Here, we’ll explore 42 key statistics on the timeline of selling a business, from preparation to closing. These insights will help you understand the typical time frame, factors that impact the sale, and how professional assistance can speed up the process.
Whether you’re considering selling or just curious, these statistics offer a detailed look at what to expect.
General Time Frame
The overall time to sell a business typically ranges from 6 to 9 months, with the average being around 200 days.
- The typical time frame to sell a business is between 6 to 9 months (1,2,3).
- The average time on the market is approximately 200 days (7.3 months) (3,4).
Preparation Phase
The preparation phase involves business valuation, marketing material organization, and can take 1-2 months before the business is ready for market.
- Initial Business Valuation: 15 days to receive a complimentary initial business valuation (2).
- Decide to Sell and Sign Listing Agreement: 15 days (2).
- Organize Marketing Materials: 30 days to prepare marketing materials and list the business for sale (2).
- Preparation Before Market: 1-2 months to value the business, prepare a CIM, and create other key documents (3).
Marketing Phase
The marketing phase varies greatly, lasting from one month to over a year, depending on buyer interest and marketing efforts.
- Listing Process: 30 days to find, qualify, and solicit indications of interest (IOI) from prospective buyers (2).
- Marketing to Buyers: This phase can take from one month to over a year, depending on buyer interest and marketing efforts (3).
Industry Impact
Businesses in high-demand industries like IT tend to sell faster than those in niche markets or complex sectors like trucking.
- IT businesses and MSPs tend to sell much more quickly due to high demand (1,3).
- Businesses in niche markets tend to sell more slowly (1,3).
- Delivery routes sell faster than trucking companies due to their simplicity and lower price (4).
Location Impact
Businesses located in growing and popular cities generally attract more interest from buyers and sell quickly.
- Growing, Desirable Cities: Businesses in growing, desirable cities attract more buyer interest and sell faster (1,3).
Due Diligence and Closing
Due diligence and closing typically take 2-6 weeks and involve the review of financials and final legal documents.
- Due Diligence Period: Typically takes 2-6 weeks while the buyer reviews detailed financial statements and other documents (1).
- Select Offer and Sign LOI: 60 days to select an offer, sign a Letter of Intent (LOI), and conduct due diligence (2).
- Prepare and Review Purchase Agreements: 30 days to prepare and review the final purchase agreements (2).
- Set a Closing Date and Close the Sale: 30 days to agree on post-closing adjustments, review and sign legal documents, and receive payment (2).
Use of Business Brokers
Business brokers can streamline the sales process, helping to avoid delays and assisting through the due diligence and closing phases.
- Broker Assistance: Using a business broker can significantly shorten the sales process and help avoid common missteps (1,2,3).
- Broker Guidance: Brokers can help speed up the due diligence and closing phases (1).
Business Value and Size
The size and value of a business impact the time to sell, with larger, high-value businesses often taking longer to complete a sale.
- Less than $100,000: Average time to sell is 199 days (6.3 months) (3).
- $100,000-$500,000: Average time to sell is 218 days (7.2 months) (3).
- $500,000-$1,000,000: Average time to sell is 243 days (8.1 months) (3).
- $1,000,000-$5,000,000: Average time to sell is 291 days (9.7 months) (3).
- $5,000,000-$10,000,000: Average time to sell is 329 days (10 months) (3).
- $10,000,000-$100,000,000: Average time to sell is 296 days (9.7 months) (3).
Buyer Pool
A larger buyer pool increases the likelihood of a faster sale, as it expands the number of potential buyers.
- A larger pool of buyers can speed up the sales process (3).
Financing
Offering financing options can alleviate buyer concerns and help speed up the sales process.
- Businesses that offer financing options can alleviate buyer risk and speed up the sale process (3).
Seller Preparation
The more thoroughly a seller prepares their business for sale, the faster it is likely to sell.
- The more prepared the seller is, the quicker the business will sell (3).
Median Days on Market (MDOM)
The median time for a business to sell is approximately 200 days, with certain types of businesses selling faster than others.
- Overall MDOM: Around 200 days, or a little over six months (4).
- Delivery routes tend to sell much faster than trucking companies (4).
Specific Phases and Their Durations
Each phase of the sale process, from initial valuation to closing, has its own timeline, with most phases taking 30-60 days.
- Receive Initial Valuation to Decide to Sell: 30 days (2).
- Preparing Marketing Materials to Listing: 30 days (2).
- Listing to Finding Qualified Buyers: 30 days (2).
- Selecting Offer to Due Diligence: 60 days (2).
- Due Diligence to Purchase Agreements: 30 days (2).
- Purchase Agreements to Closing: 30 days (2).
Trends Over Time
The average time to sell a business has gradually increased over the years, now approaching ten months.
- The average time to sell a business has increased from six months in the early 2000s to nearer ten months today (3).
Professional Advisors
Using professional advisors is common and can significantly shorten the time it takes to sell a business.
- Almost all transactions in BIZCOMPS were completed with the assistance of professional advisors, which often shortens the timeframe (3).
Buyer Interest
Higher buyer interest, especially in desirable industries and locations, can lead to a faster sale.
- Businesses in high-demand industries and locations attract more buyer interest and sell faster (1,3).
Complexity of Business
Complex businesses, such as trucking companies, take longer to sell than simpler ones, like delivery routes.
- More complex businesses, like trucking companies, take longer to sell compared to simpler businesses like delivery routes (4).
Seller Price Expectations
Unrealistic price expectations from sellers can significantly extend the sales timeline.
- Unrealistic price expectations can prolong the sales process (3).
Multiple of SDE or EBITDA
Businesses with higher SDE or EBITDA multiples are more attractive to buyers and tend to sell more quickly.
- The higher the SDE or EBITDA, the more attractive the business is to buyers, and the easier it will be to sell (3).
Post-Closing Adjustments
Post-closing adjustments, such as settling prorated expenses, can take up to 30 days after the sale is finalized.
- Final adjustments based on prorated expenses, inventory, and accounts receivable valuation can take up to 30 days (2).
Conclusion
The process of selling a business is complex and varies greatly depending on factors such as industry, location, and the level of preparation. While the typical time frame ranges from six to nine months, careful planning, realistic expectations, and professional assistance can significantly influence how quickly your business sells.
By understanding these key statistics and preparing accordingly, sellers can position themselves for a smoother, more efficient transaction.
Whether you’re just starting the process or in the final stages, these insights will help you navigate each phase of the sale with confidence.
Sources:
- https://www.brentwood-growth.com/blog/business-valuations/how-long-does-it-take-to-sell-a-business/
- https://morganandwestfield.com/knowledge/how-long-does-it-take-to-sell-a-business/
- https://www.bizbuysell.com/learning-center/article/how-long-sell-business/
- https://www.vikingmergers.com/blog/how-long-does-it-take-to-sell-a-business-2/
- https://www.midstreet.com/blog/how-long-does-it-take-to-sell-a-business
- https://cabb.org/selling-a-business-in-ca/how-long-does-it-take-sell-business
- https://raincatcher.com/how-long-does-it-take-to-sell-a-business/
- https://www.viabeacon.com/blog/timeline-to-sell-a-business
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