Just like running a company, successfully selling your business is as much about meeting your goals as it is managing your expectations. One of the first expectations to manage is timing. Early on in the process, the clients I represent during mergers and acquisitions (M&A) frequently ask me how long they can expect to wait between the start of the sales process and closing.
Here’s the short answer: It will probably take between six months and a year to sell your business.
But that’s assuming you own a typical small business. And in my experience, there’s no such thing as “typical.” The company you have spent your life building is a product of your unique personality, skills, choices, relationships, and circumstances; on a fundamental level, it’s incomparable to any other organization. Plus, market forces outside of your control tend to influence everything—from the number of potential buyers to how your business is valued, to your own sense of urgency.
However, because “How long will it take?” often means “How do we sell this thing as quickly as possible?”, here are a few tips to ensure your business is ready, now:
If you’re serious about selling your business, don’t merely think about planning—go ahead and start planning now. Nail down your exit strategy: How soon do you hope to leave your business? Will you stay on as a partial owner or in an advisory role? How much money do you need for your next move? Don’t overlook the details, and be realistic.
As you formalize your exit strategy and assess your current progress toward your goal, make sure your business is ready to sell. You should have no outstanding obligations, and your paperwork should be in order. Clean up your balance sheet, ensure that your organizational documents and licenses are up to date, take stock of your assets and liabilities, and pay off any and all debts that you can.
Get a Sense of the Business’s Value
Frankly, many business owners misunderstand their companies’ value drivers. While your company certainly would not exist without your leadership, it’s the tangible outcomes of that leadership that matter to a potential buyer. Your value proposition might be found in your products and business processes. It could be your intellectual property: patents, trademarks, copyrights, and licenses. Perhaps it’s your relationships with clients, suppliers, and other members of your industry. Or, as is repeatedly the case, it may be your people: the talented men and women you’ve hired, trained, and retained over the years.
Regardless of where you find value, keep in mind that your appraisal is just one, subjective (albeit very informed) point of view. Try different valuation techniques and seek other opinions: your accountant’s, your banker’s, your M&A advisor’s. Take note of substantial variables and differences in valuation, as these could foreshadow time-consuming negotiations with your buyer down the road.
Get Help Sooner Rather Than Later
Organization and valuation are much easier—and will go much faster—with a qualified partner by your side. Don’t wait until you hear from a buyer to contact an M&A lawyer. The attorneys of Offit Kurman’s Business Law and Transactions Practice Group work closely with our clients to maximize business value, plan ahead, and address critical risk areas on a swift and cost-effective basis.
To learn about our comprehensive approach and get in touch with a legal partner for your business, click here.
Questions about a merger or acquisition? Please contact Mike Mercurio at
ABOUT MICHAEL N. MERCURIO
Business attorney and M&A lawyer Michael N. Mercurio serves as outside general counsel on matters related to corporate law, M&A, and other lifecycle business transactions. As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on all aspects of business and commerce, with a core specialty in mergers and acquisitions—both from the sell side perspective and buy side perspective. Mr. Mercurio also routinely works with family businesses to help navigate through the unique challenges faced by such businesses.
ABOUT OFFIT KURMAN
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