How To Sell A Business Quickly
How to sell a business quickly is a question that I get asked a lot. Unfortunately, the answer is seldom what anybody wants to hear. The average time to sell a company is about seven months, which hasn’t changed much in the last several years. This article will discuss the factors that ultimately determine how fast your business is going to sell and how to shorten the time it takes to sell your business.
What You Need To Sell a Business Quickly
1) Prepare the business for due diligence
This is where the buyer reviews the balance sheet, cash flow statement, and income statement to understand the company’s financial condition. Also, the tax returns should be made available and match other financial statements.
2) The business needs minimal profitability
The company should produce a living wage, or it will likely take longer to sell or won’t sell at all. Any business can be sold, but it may take far longer, and the terms will be in line with the value of the business.
3) The business must be able to operate with a new owner with reasonable skills and talent
Your company should be able to be run by someone in the industry or of reasonable talent. Your processes, equipment, and employees should be able to operate the business within a short transition period.
4) The business must be priced right
A company’s sales price depends on seller discretion earnings (SDE). Most small companies under 500K can expect to sell for about 1.5 to 2.0 SDE, and $500K to $2MM in sales can expect a multiple of 2.5 to 3.5 times earnings.
5) Quality of earnings
The quality of earnings will also impact how long it will take to sell your business. High-quality earnings are highly repeatable regardless of who is running the business. Also, the effort to get consistent profits can be achieved with minimal effort. The higher the quality of earnings, the less time it will take to sell a business.
Pricing a Business for a Quick Sale
Selling a business quickly can be done if your company is priced right. The right price isn’t the lowest. A business priced too low will signal that something is wrong with the company. Not to mention, you leave money on the table and take a financial hit. The asking price of the business must be strategically priced for the market and advertised to a large audience of buyers. Get more information on our FAQ page, or click the button below to schedule a call today.
