The average business takes six to 12 months to sell. However, every year, we sell some companies in only a couple of months and others in a year or more. If you were wondering how to sell a business fast, we will examine some of the factors that lead to one business selling faster than another. Hopefully, this will help you determine how you can contribute to selling your business quickly.
What are your expectations for selling a business fast? When you think about selling a business quickly, how long do you envision it taking? If you said a few weeks to a couple of months, that isn’t exactly realistic. While we have had a few surprising businesses that we were able to sell “overnight,” those businesses still took quite a couple of months to sell due to the business sales process that we will look at further in this article. So, when you envision a business selling fast, keep in mind that even a few months to sell your business is still extremely fast. We want to keep you informed on how long it takes a business to sell because businesses are unlike products that are continually being stocked onto shelves. Your business took many years to reach the value it has now — selling it effectively for the right price will take a bit of time.
Understanding a potential buyer’s perspective will be insightful and influence how you present your business during the sale. Think about what motivates them. Are they seeking acquisitions to expand their market reach? Maybe they are looking for profitable investment opportunities, or perhaps they are entrepreneurs seeking entry into your business sector. It would benefit them to purchase a business rather than start fresh since the client relationships and teams are already established.
Consider what potential risks and legal liabilities might make them hesitate. You could look to remedy quick concerns and brainstorm potential solutions for larger issues, such as those having to deal with an organization’s financial health. Another area of concern is the ease of transition. By creating supporting documents and materials, these concerns can be dealt with before the buyer walks into the room.
Prepare to answer questions, such as what would you do to leverage the existing resources and achieve growth. Additionally, try to be flexible — buyers who sense urgency may get concerned about why you want to sell quickly.
One thing that businesses that sell quickly have in common is a motivated seller. A motivated seller wants to sell their business fast and is invested in the selling process. For a seller to be motivated, there is typically a good reason to sell, even to start the process. The most common reason for selling a profitable business is that the owner wants to retire. They have usually built up a great company over many years. They are typically in their 60s or 70s — or sometimes their 50s — and are ready to retire. They may want to spend more time with their grandchildren, travel, relocate, or take time off.
Retirement can be a huge motivator to sell your business quickly, but there can be a lot of emotions involved when selling your business. The psychology of selling your business can be taxing if you are not ready to part with it. When a business owner comes to us and asks how they can sell their business quickly, we know they are a motivated seller and, like many business owners we work with, are ready to sell their business fast to avoid the emotions of a long sales process.
In some cases, our business owners want to work at something else. This can make them want to sell their business fast because they are already moving on to the next project. In most cases, they will have to provide some transition period and understand that their business won’t be sold in a couple of weeks. So, they are eager to begin the sales process.
An important factor in determining whether a company will sell fast is whether you find the right match between the business you own and the business broker or mergers and acquisitions (M&A) firm you hire. You want to have a business broker or M&A firm with experience selling the type of business you own and the knowledge needed to sell your business as fast as possible. A business broker who has never sold your type of business before probably won’t be able to sell your business as fast as one who has worked in your industry.
For example, we at Synergy Business Brokers specialize in selling businesses in the construction, manufacturing, technology, healthcare, services, distribution, engineering, and transportation industries. An advantage of having a business broker with experience selling a business in your industry is that we already have potential buyers for companies in these industries. Also, we know the language of companies in these industries, which helps us market the business and speak with potential buyers. This is why we decided to specialize in specific industries. We don’t sell restaurants, gas stations, convenience stores, etc., so you would not want to select us if you are interested in selling this type of business. You would want a broker that focuses on these types of companies.
Another consideration is to select a business broker that sells businesses of a similar size as your business. We sell businesses with annual revenues of $700,000 to more than $100 million. If your business is smaller than this, you should contact other business brokers that handle smaller businesses. If your business matches our target size and we specialize in selling your type of business, we can sell your business faster than other business brokers who do not have the experience needed.
It would be best if you also worked with a business broker that you have good communication with. Communication is key in selling a business quickly and smoothly. There is a lot of information that needs to be exchanged, and a good relationship helps to speed the exchange of ideas and information about the business. The process is also more enjoyable when you work with someone with whom you have good chemistry. If you are a motivated seller who wants to sell your business fast and if you find a business broker whose vision aligns with yours, there is no doubt your business will sell more quickly. For more on selecting the right broker, you can read our article on choosing the right business broker.
Advertising across a range of platforms can maximize your exposure. Chat with us about our extensive advertising channel range and how to leverage different types of marketing to attract different sets of buyers. By targeting digital advertising, we employ search engine optimization (SEO) strategies and keywords on platforms to ensure your business will appear in relevant searches of buyers looking for opportunities such as yours.
Social media platforms are another way to attract interested parties. Together, we can create engaging content that highlights your business’s unique aspects. We also take advantage of business platforms like LinkedIn to network with buyers.
Selling a medium-sized business can take anywhere from a couple of months to over a year. There are a number of factors that could influence this timeframe, including:
To sell your business, a business broker or M&A firm will need to gather information about your business. Initially, this information is typically in the form of a confidential conversation about your business, such as what products and/or services you sell. What type of customers, suppliers, and employees do you have? What are your strengths and weaknesses?
Next, we’ll discuss an overview of what your annual revenue is and your approximate owner’s net income. To get more details, we’ll need the last three years’ tax returns and a current year-to-date profit and loss statement if it is well into the current year. With your assistance, we’ll want to identify all of your perks and benefits so that we can give buyers a complete picture of your overall compensation. We’ll use this information to provide you with a potential selling price.
Some owners are not in a rush to sell, and that’s OK. But if you want to sell fast, it pays to price the business to get potential buyers’ attention. This doesn’t mean pricing it super low because, let’s face it, even if you want to sell quickly, you don’t want to leave money on the table. Neither do we. We get paid on a commission basis, so we’d also like to maximize our commission. Besides, it’s never good to be desperate. So, what does pricing a business to sell quickly mean?
The first step is to get a business valuation from an experienced business broker or M&A firm that has sold businesses like yours. Many factors go into pricing a business. Of course, part of it is how much money you are making, otherwise referred to as net cash flow or EBITDA. Cash flow includes your salary and perks and benefits that you get from the business in addition to the company’s net income or profit. Some other factors are whether your income is going up or down and what industry you are in. For more on this, you can read our article answering the question of how much your business is worth.
But for illustration purposes, let’s take an example of a service business with an annual net cash flow below $500,000. They will typically sell for approximately two to three times the net yearly cash flow. For example, if the net annual cash is $400,000, a service business will usually sell for $800,000 to $1.2 million. When pricing a company, you don’t want to price it below this range unless there are other factors, such as the whole business revolving around you as the owner. But depending on other factors, you may want to price it in the lower half of this range, say two to 2 ½ times the annual net cash flow. This will be low enough to get potential buyers interested but not so little that you leave money on the table.
Another example would be a software company with an annual net cash flow of $3 million. The price range might be five to ten times the net income for this company, so pricing the business somewhere between $15 to $18 million would be an aggressive pricing strategy.
Sometimes, pricing a business aggressively works to your advantage in getting multiple bids and selling the business over the asking price. Also, having numerous bidders usually leads to buyers moving quickly so that someone else doesn’t get the chance to buy the company before they do. Let’s face it: It’s human nature to want something that other people want, and pricing a business aggressively generally leads to competition for your business.
We have a database of 40,000 potential buyers and a comprehensive marketing plan. In most cases, we can introduce at least one or more qualified and interested potential buyers within the first one to eight weeks of our assignment. If one of our clients hasn’t had any potential buyers within that time, we generally recommend a price decrease if they are motivated to sell their business quickly.
We’re experts in selling businesses, but you are an expert in your specific industry, so working together leads to the best results. Before we begin marketing the company, you can tell us what makes your business unique. We’ll exchange ideas for positioning the business to attract the right potential buyers. You might also have ideas on specific buyers to target or ones you don’t want to work with. We also like to hear your views on how a new buyer could improve what you have.
We’ll do a lot of qualifying of buyers, but once we have a buyer that is both qualified and interested, we’ll make an introduction to you. Then, you can do your part to discuss the details of your business and answer any questions that the buyer might have. We’ll coach you to be honest and open but, at the same time, be optimistic and easy to work with. You can tell them all about the great things that your business has to offer. It’s best to discuss the weaknesses as an opportunity for the buyer to bring the company to the next level. Keep in mind that every buyer that we introduce to you will have already signed a confidentiality agreement and provided us with information on their qualifications so that you can discuss your business in confidence.
After you have met with one or more buyers and answered their initial questions, the next step would be for buyers to make an offer for your business. This usually takes the form of a letter of intent (LOI), which outlines the offer’s price and terms. This is typically a one-to-five-page document that we can help the buyer draft. The goal is to get multiple offers, and we will help you understand the difference between the proposals and the buyers. We’ll discuss which ones are most likely to move quickly and which buyers are most likely to close on the business. We’ll identify what things should be negotiated in the offers, including the price and terms and how much time they want to take for due diligence, as well as what amount of information they will require.
Enter negotiations with an open mind. You can keep clear goals that are important to you while being open to compromises and adaption. For example, the transition period might have to be adjusted. Some buyers require a longer handover period to fully understand the business operations. Others may prefer a quicker turnaround time. You can find a middle ground that works out for both of you. You’ll want to acknowledge and address the buyer’s concerns with empathy and openness.
Working together, it’s important to provide all of the required information to the buyer as soon as possible. Having your accountant readily available to give the details is an integral part of selling your business quickly. We’ll help discuss due diligence issues that might come up, such as whether what is being asked is normal or beyond the scope of what is typically done in due diligence. We can also set up private data rooms to exchange information and provide recommendations on an accountant if your accountant is too busy with other things.
There are a few different types of funding for the purchase of a business.
We have sold businesses quickly with all different methods of financing. Every deal is different, so we work with each seller to explain the pluses and minuses of each offer and scenario presented to them, including the financing proposed. This way, you can weigh the advantages and disadvantages of each proposal in terms of speed and likelihood of a deal being closed, the amount of total purchase price, and the amount paid at the closing. You may also have your own opinion on who you like better personally to take over your business, so together, we can help you make the best overall decision.
The LOI, also called the offer letter, will have the basic price and terms of the deal, but you will need a more substantial contract to complete your business’s sale. The purchase agreement can be 50 to 100 pages or more. This number of pages does not come together quickly, but if you and the buyer are in agreement, the contract can come together faster so your business can be sold quickly. This is why we seek out qualified buyers to purchase your business fast.
Sometimes, the purchase agreement is negotiated while due diligence is taking place, and sometimes, this will be done after due diligence is completed or mostly finished. There are advantages and disadvantages to either scenario. If you wait until after due diligence is completed to negotiate the purchase and sale agreement, then you and the buyer won’t incur any legal costs if something is uncovered in due diligence that causes the deal to fall apart. The advantage of getting the lawyers involved to negotiate the purchase agreement while due diligence is beginning is that with a concurrent process, of course, things move more quickly, and you don’t have to wait until due diligence is completed. Most of the time, some of the due diligence is completed before negotiating the purchase agreement.
If you want to sell your business fast, it is helpful to have a lawyer who has experience negotiating business sale transactions. If your lawyer does not have this experience, we have lawyers to recommend who can move things forward in a timely fashion. It’s no secret that lawyers can slow a deal down or kill the deal. Many minor issues need to be negotiated, and you don’t want a minor problem to slow down or unravel your deal. Since we’ve been involved in hundreds of transactions, we’ve seen the same or similar issues that come up. We’ll work with you to bridge the gap between attorneys when necessary and keep a deal moving forward.
Our business brokers keep the deal moving forward by answering questions and keeping communication flowing to overcome any obstacles. It helps when the attorneys and accountants are available and responsive. If they can’t resolve any issues, we’ll set up a conversation between the buyer and seller to move things forward.
Not all of our assignments result in a quick sale, but that is our goal with every assignment that we take on — particularly when the seller is motivated to get their business sold fast. If you want to sell your business fast, stay motivated and hire the correct business broker to sell your company.
Hopefully, we’ve answered a lot of your questions about how to sell a business quickly. Every business is unique. We offer a confidential consultation to discuss your goals and outline a strategy to help you meet them. To get started, please fill out our online seller contact form or call 888-750-5950. We sell profitable businesses in the industries that we specialize in throughout the US and worldwide. We have Brokers in every region of the country, including the Northeast, the Mid-Atlantic, the South, the Midwest, and the West. To start to get to know us, you can watch our corporate videos.
