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How Long Does it Take to Sell a Business?

The time:
The non-answer – answer… “It depends”.

Okay, on what?

The time required to sell a business depends upon the industry, location, size, profitability, appropriate asking price, quality of financial reports and yes, which firm you select to represent you.

Business Brokerage Press annual survey of business brokers in 1992 found the average time to sell a business was 4.8 months. In 2014 survey results were just over 12 months. Note that this only accounts for businesses that sold. The increase in time is likely attributable to perceived difficulty in buyer financing. Note “perceived”.

Since the start of COVID, ENLIGN’s closings were heavily concentrated around 7 months.  The longest it has taken an ENLIGN broker to close a transaction was 5 years and 22 days.  The shortest time to close a transaction was 27 hours.


The cost:
Virtually every business broker and business brokerage firm charges a commission at the time of closing based upon the purchase price. The industry likes to call this charge a “Success Fee” – presumably because it sounds better than a “Commission”. However, that’s what it is – a fee paid to the broker for managing a transaction through closing.

The percent ENLIGN charges is 10% on transactions up to one million dollars. That represents a $100,000 commission for the sale of a million dollar business. Sound outrageous? It’s not really. For two reasons. The first is the doctor analogy. When you go to see a doctor you aren’t paying for his time, you are paying for his expertise. You want to feel better and live longer.

The fee on the second million of purchase price is 8%, on the third 6% and 4% on amounts above $3 million.

In a business sale scenario you want your business to sell – nothing matters if it doesn’t actually sell. Selling a business is extremely difficult with many many moving parts (which is why we love it so much). An experienced broker will insure you receive the maximum market value, minimize the time required to close, reduce your stress and most importantly actually SELL your business.

ENLIGN brokers have been extremely successful in negotiating terms and conditions for our clients that generate higher multiples and more cash for our Sellers.  One example was the removal of a royalty carve out that increased the Sellers proceeds by over $400,000 – almost completely covering the commission paid on the entire transaction with that single term.

An experienced broker brings more value to the transaction that their fee – not subjectively, but literally.

ENLIGN, unlike most main-street business brokers also charges a listing fee that is subtracted from the commission at closing. See the related FAQ on listing fees.

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Enlign

How can we help you?

With 20 years of experience and hundreds of completed engagements, we have the knowledge and proven process to guide you through a successful business transaction. You can rely on us to manage every detail with complete confidentiality.

  • Main Street
  • Mergers & Acquisitions
  • Valuations