You’ve started up a business, but it isn’t working out for you. Maybe something else came up in your life that’s forced you to sell your business. Or maybe a bigger company is interested in purchasing and consolidating it with theirs.
Regardless of why you’re selling a company, don’t expect it to happen overnight. Businesses for sale can take as little as six months to sell, and even longer for a larger company.
Here’s how to sell a company and what factors can affect the timeline.
The Process of Selling a Company
There are multiple ways to sell a business, and the best one will depend on your current situation. Your three basic options are to utilize an auction process, make a negotiated transaction, or use the employee stock ownership plan (ESOP). Employee stock ownership allows a company’s owner to sell their shares to pass on ownership.
The first step companies for sale must take is reverse due diligence. A third party should assess the business before it’s presented to buyers.
After that, you’ll need to get information on the buyer, negotiate a price, get a letter of intent, and run a background check on the buying company.
Most of your time will be spent on marketing efforts and then preparing your company to close after it’s sold.
Factors to Consider
Some of the various factors that could affect your timeline include the price of purchase, the buyer, and your company’s structure and organization.
The higher the price, the longer it will take to sell. Even if you find someone who can afford the purchase, they may require longer due diligence periods.
Your business structure can also slow down the selling process if you need to streamline your daily operations. It’s best to work on simplifying your daily operations and keep track of your finances beforehand to make your business more attractive to buyers.
Tips for How to Sell a Company Quicker
The length of time it takes to sell a company is inversely proportional to how much preparation you put in beforehand.
If you want to sell a restaurant business, then you should estimate its worth and use a business broker who specializes in your field. Take the time to clean up your property and make it more attractive to buyers.
You should also hold off on selling until your bookkeeping and accounting is in order. Keep an eye on the current market conditions to find out the right time to sell. It may be worth holding off if the supply chain has issues at the moment.
Avoid the Waiting Game
There’s a lot you can do when selling a company to speed up the timeline. Consolidate and streamline all of your company’s processes so it’s easier to transfer over to a new buyer. Spend some time staging your property and presenting your business as a worthwhile investment.
Most importantly, be open and honest with a prospective buyer. The last thing you want is for them to pull out at the last minute.
Check out our other articles for more tips and information on other business topics.