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Timing Your Exit - Don’t Underestimate the Length of the Sales Process Part 1

Unfortunately, for those of us who like to plan, the time it takes to sell a business is not predictable.  Even after the sale has completed, the business owner is likely to be ‘tied in’ to a handover arrangement for a number of months.  Depending upon the deal structure, you may be tied in for a number of years.  If there is a performance -related element you may opt to be present in the business, at least part-time, over this period.

The actual selling process breaks down into 3 phases, once you have appointed an adviser:

  1. Getting onto the Market: This is the time between appointing an adviser and the business being advertised.  The critical path and ‘must have’ item is the Confidential Briefing Document (aka ‘IM’, ‘Sales Details’).  This needs to be of the highest quality and so, even if you have all of the information your adviser requires, it is likely to take a month to 6 weeks to put this together.  If something is missing (accounts and forecasts are the usual ‘culprits’) the process will take longer.
  2. Attracting the Buyer: How long is a piece of string?  Given that the buyer will need to make him/her/itself known, be qualified as having the funds, fulfil the Non-Disclosure Agreement, meet the vendor, see the business, negotiate Heads of Terms you can assume that this will take 3 months at the very least.  If holiday periods intervene you can add on however many weeks as appropriate.  But, of course, the party who turns into the buyer may well not come along for many months or even, at worst, years after advertising starts.  At Anderson Shaw we have had (only a few, fortunately) clients who we have been assisting for up to 5 years – ill health & death, disputes, economic/business downturns can all add months or years to this part of the process.
  3. Legal Stages – Assuming a sale of shares you should allow between 8 and 12 weeks, longer if Christmas or Summer holidays intervene. Sadly, in about 1 in 4 cases the deal fails at the Heads of Terms stage and, in this case, you will be back at stage 2.

 So, in summary, you can’t predict the time it will take to sell your business once you have appointed an adviser.  However, based on our experience over many years, we advise clients to plan on 12 months before the (or, more accurately ‘some’) money is in your bank. 

I’ll return to this topic in a future article.  At Anderson Shaw Corporate Finance Ltd, we are always happy to both provide a free preliminary valuation and also work with the business owner through the period of exit planning and then ultimately a sale.


Anderson Shaw has offices on the outskirts of Coventry and provides business broker and corporate finance services for clients throughout the Midlands and the UK.

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