Of course that is our goal as well since our payday is dependent on the transaction closing quickly. But the reality is that the majority of deals take between six to twelve months to close once you enter the market. A lot of this time is spent sorting through potential buyers trying to find the optimal buyer and during buyer's due diligence. Oftentimes sellers think the business is sold once we receive a signed offer and acceptance letter. However, due diligence can take several months depending on speed of information being provided to the buyer and the number of professionals they have conducting the diligence (attorneys, accountants, etc.). Lastly, if financing is involved you can be assured to add another couple of months (minimum) to the process.
If you are selling your company on your own, you need to plan on it taking even longer, as you won’t have ability to dedicate 100% of your attention to the process because you have to continue running your business. Also, the last thing a buyer wants to see is a downward trend in earnings, which is what oftentimes occurs once a seller stops focusing on the business.
This reality was born out in a recent study conducted by the Pepperdine University Graziadio School of Business and Management. On an annual basis the researchers at the university survey key players in the private capital markets industry on a variety of topics.
One of the questions they posed to nearly 200 investment bankers was how long is it taking to close deals in today’s market. The results were 63% of their deals take between six to twelve months to close. Sunset Insurance Group is currently experiencing a four to ten month time frame.