How long does it take to sell a company?

The durability of a company’s selling process can vary significantly depending on several factors. On average, the complete process can take 6-12 months, but in some cases it can be faster or take more than a year.

Factors Influencing Time to Sale:

• Company Preparation: A well-organized company, with clear and audited financial statements, documented operational processes, and a strong management team, generally attracts more buyers and facilitates a faster due diligence process. Being “sale-ready” can significantly reduce the time it takes.
• Enterprise Value: Businesses with higher prices tend to take longer to sell, as there are fewer qualified buyers with the necessary financial resources.
• Sector of Activity: Some sectors are more attractive to buyers than others. Growing or highly profitable industries can generate more interest and potentially faster sales.
• Market Conditions: General economic conditions, interest rates, and investors’ appetite for acquisitions can influence the speed of the sale. Heated markets can accelerate the process.
• Type of Buyer: Different types of buyers (individuals, strategic firms, private equity funds) have their own review and approval processes, which can affect the timeline. For example, individual buyers who need bank financing may take longer due to the loan approval process.
• Marketing Process and Buyer Search: How effectively the company is presented to the market and the number of potential buyers identified can influence the speed at which an offer is received.
• Due Diligence: The rigor of the investigation carried out by buyers on the finances, operations, legal and other aspects of the company, can vary and affect the duration of this phase.
• Agreement: The complexity of the terms of the sale agreement and how quickly buyers and sellers reach a consensus can also influence the overall time.
• Closing: The legal conclusion of the sale involves the execution of documents, the transfer of assets and the fulfillment of other formalities, the duration of which may vary.

Typical Phases of the Sales Process and Their Estimated Timelines:

While timelines may vary, a company sale process typically involves the following phases:

1. Preparation (2 to 6 weeks): Company valuation, organization of financial and operational documents, preparation of marketing materials (such as the Confidential Information Memorandum – CIM).
2. Marketing and Buyer Search (3 to 6 months): Identification and contact with potential buyers, signing confidentiality agreements (NDAs), company presentation (through CIM and initial meetings).
3. Letters of Intent (LOIs) and Negotiation (2 to 6 weeks): Receipt and valuation of non-binding offers (LOIs), negotiation of the main terms of the sale.
4. Due Diligence (1 to 3 months): Detailed investigation of the company by the buyer.
5. Purchase and Sale Agreement and Completion (1 to 2 months): Drafting and negotiation of the final contract, signing and completion of the transaction.

Recommendations:

• Start planning ahead: Ideally, start the process of preparing for the sale 12 to 18 months in advance.
• Seek professional advice: Hiring an experienced M&A advisor can help streamline the process, identify the right buyers, and speed up the sale.
• Be prepared for due diligence: Have all documents and information organized and ready to be provided to potential buyers.
• Being realistic about pricing and timelines: An accurate valuation of the company and realistic expectations can help attract serious buyers and avoid delays.

In summary, there is no fixed deadline for selling a company, but being well prepared and having the support of experienced professionals can contribute to a more efficient and faster process.

At ValuingTools, we valuate, buy, and sell companies with complete transparency and efficiency. With our experience and knowledge of the market, we help you speed up the process and get the best conditions for your business.

Contact us today and find out how we can optimize your company’s sale!