How Long Does It Take to Sell a Business?

It Depends, But Not on Luck

Every sale moves through the same basic stages. What changes from deal to deal is how long each stage takes, and that usually comes down to preparation, price and the buyer's financing.

Owners who plan for a long process tend to make better decisions. Owners who expect a quick sale often cut their price or accept weak terms just to be done.

Below is each stage, what drives its length and what you can do about it. The examples are illustrations, not promises or market averages.

Stage One: Getting Ready

Before a single buyer hears about your company, the groundwork has to be done. That means recast financials, a value range, a CIM and a list of the documents a buyer will ask for.

If your books are current and your records are organized, this can go quickly. If a year of statements needs rebuilding, or your CPA is in the middle of tax season, it can take a good while longer.

A realistic value range matters here too. A business valuation grounded in real earnings keeps you from listing at a price that sits for months without a call.

Stage Two: Finding the Right Buyer

Your broker markets the company with a blind listing that leaves out your name. Interested buyers sign an NDA, get the CIM and ask questions. The serious ones ask for a call or a visit.

This stage has the widest range. A well priced HVAC or plumbing company with steady service revenue may draw interest fast. A niche manufacturer may need time to reach the handful of buyers who fit.

Your broker should screen buyers for funds and experience before they get far. Weeding out tire kickers early saves more time than any other single step.

Stage Three: The Letter of Intent

When a buyer is ready, they send an LOI. It sets out the price, how it will be paid, the structure and an exclusive period for due diligence.

Negotiating the LOI can take a few days or a few weeks. Spending the time here is worth it. Every term you leave vague in the LOI comes back to be argued later, when you have less room to push back.

Stage Four: Due Diligence and Financing

Once the LOI is signed, the buyer checks everything: financials, tax returns, contracts, employees, equipment and leases. Larger buyers may hire a firm for a quality of earnings review.

At the same time, most buyers are lining up a loan. Buyers of smaller companies often use SBA 7(a) loans, which top out at $5 million. The lender will want its own appraisal and its own review of your numbers.

This is where most delays happen. A missing document, a number that doesn't tie out or a lender asking new questions can each add weeks.

Stage Five: Third Parties and Closing

Some steps depend on people outside the deal. Your landlord may need to consent to a lease assignment. Key customers or suppliers may need to approve a contract transfer. Licenses and permits may need to move.

Texas adds a state tax step. Buyers commonly want a Certificate of No Tax Due from the Comptroller, which has 60 days to respond. Our guide to the Texas certificate of no tax due explains why to start early.

Meanwhile, the attorneys turn the LOI into an asset purchase agreement. Closing happens once the money, the documents and the approvals all line up on the same day.

A Sample Timeline

Here is a hypothetical sale of a Fort Worth service company doing a few million a year, to show how the pieces stack up. Your own deal could be shorter or much longer.

• Months 1 and 2: recast financials, valuation, CIM and blind listing
• Months 3 to 5: buyer calls, NDAs, site visits and first offers
• Month 6: LOI negotiated and signed
• Months 7 to 9: due diligence, SBA loan approval and the purchase agreement
• Month 9: closing, followed by a transition period with the new owner

Notice how much of the calendar falls after a buyer is found. Many owners assume the hard part is finding someone. Often it is getting that person all the way to closing.

What Slows a Sale Down

Long sales rarely stall for one dramatic reason. More often, small problems pile up and each one costs a few weeks. These are the ones that come up most:

• An asking price well above what the earnings support
• Financials that are late, messy or don't match the tax returns
• An owner who handles every customer and every key decision
• A short lease, or a landlord who is slow to respond
• Surprises in diligence, such as an unpaid tax or a lawsuit

What Speeds It Up

Most of the fixes happen before you list. Clean monthly financials, a manager who can run daily work and a data room built in advance all shorten diligence.

More than one interested buyer also helps. When a buyer knows others are waiting, they tend to move faster through diligence and push their lender harder.

If you have a year or two before you want to sell, our exit planning page lays out the work that pays off most in time and price.

After the Closing

Your role rarely ends at the closing table. Most buyers ask for a transition period to meet customers, learn your systems and keep the staff steady. Agree on its length and pay in the purchase agreement.

If part of your price is a seller note or an earnout, your connection to the company lasts longer still. Factor that into your plans for retirement or your next venture.

Getting Started

The clock starts when you know your number. Request a free, confidential valuation, or call (817) 555-0142 to talk about timing with an experienced broker.