Selling your business is a significant decision, and understanding the timeline can help you prepare better. Here’s what you need to know:
Personality Types and Patience
Business owners often fall into two categories:
- Type A: They make decisions and want immediate execution.
- Type A+: They make decisions and wanted them executed yesterday.
However, selling a business is a complex process that requires time and patience. It typically takes between three to nine months to sell a business in the revenue cycle space.
The Importance of Professional Guidance
Your business likely represents a substantial part of your estate and the value of your life’s work. Rushing the sale can lead to costly mistakes. An experienced professional can help you navigate potential pitfalls and maximize your business’s value.
Typical Timeline for Selling a Business
Month 1: Preparation
- Confidential Information Memorandum (CIM): Your advisor will request necessary documents to draft the CIM, which showcases your business to potential buyers. After your approval, the CIM is finalized.
Months 1-2: Identifying Potential Buyers
- Buyer List: Your advisor will compile a list of potential buyers, including private equity funds, strategic buyers, and high-net-worth individuals.
- Non-Disclosure Agreements (NDAs): Potential buyers sign NDAs to keep your sale confidential.
- CIM Distribution: The CIM is shared with interested buyers, and your advisor handles inquiries and additional information requests.
Months 2-4: Building a Pipeline
- Prospect Meetings: Serious prospects will want to meet you. These meetings can be in-person or virtual, arranged by your advisor.
- Follow-ups: Your advisor will facilitate responses to additional information requests and arrange further meetings.
Months 2-4: Soliciting Offers
- Letters of Intent (LOIs): Your advisor will solicit offers and help negotiate terms. Multiple LOIs may be reviewed before finalizing a deal.
Months 3-5: Closing the Deal
- Purchase Agreement: Once an LOI is accepted, it takes about 2-3 months to close. The buyer’s legal team drafts the purchase agreement, which your lawyer reviews and negotiates.
- Due Diligence: The buyer conducts a detailed examination of your business, often with the help of accountants and attorneys.
- Finalizing Funding: The buyer secures necessary funding.
- Closing: Once due diligence is complete and all documents are agreed upon, the sale is finalized.
While some businesses sell in as little as 30 days, most take 6-9 months to close. For a detailed plan tailored to your business, contact G. R. Capital Management. All communications will be held in strict confidence.
For the complete article / post, on this subject click the icon below or visit our website and click “Before You Sell” ( A MUST READ ). This is one of a short six-part series designed to properly prepare a business owner looking to sell their company.
