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Gary T. Brooks of ExitPlanPros.com and John Warrillow of BuiltToSell.com estimate the length of time to sell a business at six months to a year on the average.  Selling a business starts when you create a saleable business with predictable revenue. Planning your exit starts years before you actually decide to  put your company on the market.  Once the decision to sell is made, valuation of the business comes next.  You could sell the business yourself or opt to engage the services of a business broker.  Perry Miele, chairman of Beringer Capital, says, “From the day you engage an advisor to having a check in your hands usually takes about six to eight months.”  Once a serious buyer comes in, you will enter the letter of intent negotiation followed by the due diligence process.  Financing and closing wraps it all up.

Let’s look at each milestone, considering what it involves and how long you can expect it to take.

1. Evaluation and Presale Planning. I usually recommend that you begin planning your exit many years in advance of when you will actually want to sell your business.  Once you are ready to put your business on the market, it may take 3 or 4 weeks to perform an evaluation on the business.

2. Packaging. It usually takes about a month to create all of the materials needed to market a mid-sized company.

3. Identifying Acquisition Candidates. Finding the right buyer can take months and sometimes years.  If there are obvious buyers for your business, then it may take two to three months to determine if any of them are interested in making an offer.

4. Negotiating Letters of Intent (LOI). Assuming that one or more identified buyers want to make an offer on the business, it takes 45 to 60 days to negotiate the Letter of Intent.  The buyer will rarely make a full price offer on the first pass; so you’ll be negotiating a number of drafts of the LOI before it is acceptable to all parties.

5. Contracts and Due Diligence. Once the LOI is signed, your next steps are to negotiate the contracts and perform due diligence.  These are separate processes that usually occur in parallel, taking about 90 days to complete.  Now is also the time for the buyer to procure any third-party financing.  Most financing takes about 90 days to put in place, so if the buyer does not have financing sources already identified, this may stretch out the time to closing.

6. Closing. The closing is when the business actually changes hands.  This is handled primarily by the attorneys and may take a day or two, depending on whether all the documentation is accounted for and there are no problems uncovered  …

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