There are many things that can slow down and prevent a business from being sold. But time delays are probably the most likely reason a deal will not occur. There are other possible reasons, of course, but time delays are a big one.
The more time that goes by, the more likely the parties involved (read buyer) will become tired and frustrated. As time goes by, the seller is in a condition of uncertainty. Expenses will increase and other potential buyers will be missed. Eventually, one side or the other will just give up and move on.
The length of time it takes a business to sell will vary based on many factors. But on average, in reasonably good economic times, it can take up to a year. Or longer than a year.
After a Letter of Intent is received, due diligence and the closing must occur. This can take 30 – 90 days depending on circumstances.
What can the parties do to keep things progressing?
Maybe the most important item is having good advisors. Not every attorney, CPA, or intermediary is skillful in business transactions. In getting the deal done. Sometimes, CPAs and attorneys are known to actually kill a deal. Inexperienced advisors may mean well, but they can cause a lot of harm. Avoid this. Make sure yours knows what they are doing. Regardless of what they may claim and promise.
Especially make sure your intermediary is able to focus on your transaction. And has the resources to apply to your deal.
Ask the intermediary lots of questions. That person should know the process well and can work with in lots of detail while at the same time maintaining the big picture. They should know the pitfalls that exist at each stage of the process. There is much to coordinate and missing one item can cause a time problem.
At the beginning of the process, the intermediary should spend time preparing the marketing materials and advising you on how to prepare the due diligence materials. A thorough review of the business by an experienced intermediary can identify most of the questions that will arise during the buyer’s due diligence. Having materials prepared ahead of time will make everything go faster.
Maybe most importantly, the seller needs to be emotionally ready to sell the business. Sellers have been known to prevent the sale of their business at the last minute because they haven’t prepared in this way. What is the owner going to do after the sale? Are they ready to be involved in the business for some time after the closing (that often happens)? These questions need to be answered before the sales process.
Most importantly, everyone should work with experienced advisors to make the process go faster and with fewer problems.
