The query we frequently encounter is, “How long does it take to sell a company?” An undoubtedly valuable question, yet one that proves challenging to answer due to multifaceted factors, given the inherently gradual nature of business sales. On average, the typical timeframe for finalising a sell timeline lies between six months and a year.
For this reason, it becomes imperative for sellers to embrace the notion of preparedness right from the outset, acknowledging the prospective elongation of the process.
Preparation
The initiation calls for navigating through the preparatory phases, spanning a minimum of 6 to 8 weeks. Failing to stand equipped can substantially impede or even jeopardise the sale. A myriad of issues, best addressed in the preparation stage, can evolve into intricacies or even decisive hindrances during the negotiation phase.
Conducting simulated due diligence serves as a vital tool, guaranteeing comprehensive alignment in terms of legality, operations, fiscal responsibility, and commercial facets.
Marketing
The task of projecting a sale’s market presence proves intricate in terms of prediction, encompassing a range of 1 to 4 months. This span significantly hinges upon the prevailing market dynamics and economic conditions. Notably, economic downturns, such as a recession, invariably extend the sell timeline required for a successful sale. As potential buyers begin to emerge, the M&A advisor representing the seller undertakes preliminary discussions regarding the opportunity’s outlines. Confidentiality agreements are subsequently pursued to enable the release of more specific company-related data.
Negotiations and Closure
This juncture necessitates the comprehensive determination of pricing, supplementary costs, payment terms, and associated deadlines. Multiple exchanges between the buyer and seller transpire prior to the formal acceptance of the Letter of Intent (LOI). While smaller business transactions can conclude within 1 to 2 months, more extensive business dealings typically extend to approximately 3 months for finalisation.
Once the LOI secures consensus, swift progress towards final contract signing remains paramount. The due diligence phase, essential in validating the absence of concealed issues and ensuring the retention of vital elements from prior phases, comes to the forefront. Legal professionals subsequently undertake the task of refining the agreement’s legal dimensions, enhancing it to encompass contingencies while upholding regulatory compliance.
Conclusion
Rather than fixating on a specific time parameter for selling a company, a more constructive approach entails acquainting oneself with the intricacies of the M&A process and comprehending the average duration of each stage. It is equally pertinent to note that a business primed for sale typically undergoes a year-long journey, from preparatory measures to ultimate closure. Conversely, businesses less poised for sale might necessitate an extended span to reach the point of readiness.
Venture Corporate Finance emerges as an intermediary for middle-market M&A advisory services, catering to clients with intentions of business sale, capital augmentation, restructuring endeavours, or acquisition-driven expansion. We deliver impartial counsel and tailor transaction solutions to mirror individual objectives.
For further insights into corporate finance and M&A services, feel free to engage with the experts at Venture Corporate Finance.
