If you came to this article it’s likely you are looking to sell your business fast. But what is the timeline for a fast business sale? 54% of brokers say it takes anywhere from 6 to 11 months for a business to sell. The United States Small Business Administration puts the timeline at 24 months (2 years). However, this isn’t to say that it’s not possible to sell in a shorter time frame.
So, in this post, we lay down seven steps demonstrating how you can sell a private business fast.
Step 1: Figure out your reason for selling
Every business owner markets their business as a successful and profitable venture. Astute buyers will be keen to know why then you’d sell it.
You must have an answer ready and it must be a legitimate reason. Acceptable propositions for selling include illness, death, change in marital status, impending retirement, and the business growing beyond your ability to manage it.
Saying that you’re selling the business because it is in distress and struggling is a turn-off for any investor. If the business is indeed in trouble, it’s key that you first attempt to raise its profile by boosting sales, building a stronger client base, and accruing regular revenue.
Step 2: Determine when you plan to sell
When should you sell your business? Timing is everything. Selling should not be a rash decision. Careful thought and consideration should go into making this decision. Furthermore, getting a business ready for sale is a process that in and of itself requires at least a year or two of preparation.
Next, you need to evaluate the existing market and economic conditions.
Attempting to sell your private business during an economic downturn can prove disastrous. The business may be undervalued and the quality of offers received might not reflect the company’s real worth. And speaking of valuation…
Step 3: Get a business valuation done
“…a general process of determining the economic value of a whole business or company unit.”
It’s an excellent way to establish a business’ fair value as the valuation itself is conducted by an independent third party. Business valuation experts may look into the organization’s earnings multipliers, market cap, and book value in order to give an objective estimation of the company’s worth.
The document generated by the appraiser can be used to lend credibility to the seller’s asking price as well as justify the listing price.
Step 4: Hire a qualified business broker
It can be tough to sell a private business fast without assistance from an experienced business broker. You see, seasoned brokers will guide you through the selling process, develop a marketing plan to quickly sell your company, and assist with obtaining a current business valuation, on top of negotiating on your behalf with the buyer side.
Now, how to select a business broker? What should you be looking for?
- The Track Record of successful deals completed by the brokerage firm will speak volumes about their capabilities and experience.
- Accreditations from the International Business Brokers Association (IBBA).
- The number of listings a broker currently has and is actively managing. ·
- The broker’s intended marketing strategy for the sale of your business including details of how they plan to keep the sale confidential.
- The broker’s screening process and what it involves. You want a broker with a well-established and vetted screening process.
Step 5: Get business documents in order
Numbers excite investors. Buyers pay a great deal of attention to businesses whose financial records are in meticulous order. Therefore, having your business documents readily available works in your favor as this demonstrates your seriousness, your reliability, and the business’ track record.
If you’re not sure what documents are needed to sell a business your broker can provide you will a comprehensive list. There are mainly two sets of documents – legal and financial – that need to be prepared. For example
- A Non-Disclosure Confidentiality Agreement
- Offer-to-Purchase Agreement
- Existing Lease Agreements
- Employment Agreements
- Internal Profit & Loss Statements
- Balance Sheet
- Corporate Tax Returns
Step 6: Start looking for buyers
Through a rich network of contacts cultivated over many years, they’ll be able to source and connect you to retired executives, private equity firms, and interested competitors among other prospective buyers.
Such brokers can easily wade through buyer motivations, pre-screen and qualify hopeful candidates and verify whether they actually have the necessary finance to close the deal or not.
Step 7: Close the sale and handover
After signing on the dotted line, the transition period begins. This stage can be complex if not handled strategically. For this is generally when vendors and employees need to be brought up to speed regarding the change of owners. Communicated poorly this can complicate relationships with suppliers and lead to mass employee exodus.
What further aggravates the situation is whether the previous owner wishes to remain to help or not and whether the new owners want them there or not.
As it stands:
48% of previous owners don’t want anything to do with the business after the sale is closed, while 18% do wish to stay on and help through the transition.
On the flip side, 49% of new owners want the previous owner to remain and help out at least 3 days per week while 11% of new owners don’t want the old owners anywhere near the business.
Looking for a reliable business broker?
If you want to sell a private business fast, our expert Sun Acquisitions team can help. Discuss buying/selling a business with our M&A consultants. Contact us today.
Looking for more insight on selling a business? Check out these links:
- Best Practices For A Successful First Meeting With A Business Owner
- Are You Financially Ready?
- Are You Emotionally Ready?
- Waiting Too Long to Sell
Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.