27 Mar How Long Will It Take to Sell My Business?
Whether you are entering the market as first time seller or this is your seventh sale, each experience is bound to be different. The state of the economy, the demand for salable businesses, current cultural desires around entrepreneurship and many more factors can all contribute to the current state of the M&A market. However, across all types of sellers, how soon you can expect to sell your business is almost always at the top of the list of questions.
Recently, Pepperdine Private Capital Markets Project (in conjunction with the International Business Brokers Association and M&A Source) analyzed data from its 2018 Q4 Market Pulse survey completed by business intermediaries, M&A advisors, and other business transaction professionals based on their recent deal experiences. In regards to the length of time a business was on the market, here’s what they found:
In the $5MM- $50MM deal range, the deal took an average of 12 months to close with a time period of 4 months from LOI to closing.
In the $2MM- $5MM deal range, the deal took an average of 10.5 months to close with a time period of 4 months from LOI to closing.
In the $1MM- $2MM deal range, the deal took an average of 9 months to close with a time period of 3 months from LOI to closing.
In the $500K- $1MM deal range, the deal took an average of 8 months to close with a time period of 3 months from LOI to closing.
Finally, for deals less than $500K, the deal took an average of 7 months to close with a time period of 2 months from LOI to closing.
The data shows that as the size of the deal increases, so does the amount of time that it takes to close. According to one advisor, the slower than normal time to close is likely attributed to the higher premiums that businesses are selling for. Businesses are priced higher than average right now because there is a very high demand and because there are more businesses with strong financials than in previous years. However, buyers seem to be taking more time during the due diligence stage of the sale to ensure that they are getting their money’s worth in the transaction.
To gain insight on these and other current market conditions, contact Luis de la Prida of The NYBB Group. The NYBB Group can be a resource to help business owners determine the marketability and approximate value of their business.
If you would like to discuss this article or schedule a private and complementary consultation, please contact Luis at Lou@nybbinc.com or 631-390-9650.