M&A Insight: The Timeline for Selling a Midsize Business

When it comes to selling a midsize business, the journey from “listing” (going-live) to closing can vary significantly. On average, the process typically spans 9 to 12 months, but this is not set in stone. The timeline is influenced by a multitude of factors, including market conditions, the business’s financial health, and the readiness of the business for sale.

Preparation is Key The preparation phase, which includes valuing the business, preparing financial statements, understanding sellers tax position, and enhancing business attractiveness, can take several months. This stage is crucial as it lays the groundwork for a successful sale.

Going to Market Once the business is listed, finding the right buyer can be quick or time-consuming. If the business operates in a niche industry or has specific characteristics that appeal to a limited investor pool, it may take longer to find a suitable buyer.

Due Diligence and Negotiations After a buyer is found, due diligence begins. This phase, where the buyer verifies the business’s financials and operations, can be lengthy, especially if issues arise that require negotiation or remediation.

Closing the Deal The final stage involves legal and financial transactions to transfer ownership. This can be swift if both parties are well-prepared and agreeable, or it can drag on if complications arise.

The Variables at Play Several factors can expedite or delay the sale:

• Buyer’s Readiness: A motivated and financially prepared buyer can move quickly through the process.
• Seller’s Flexibility: A seller who is open to negotiation and flexible on terms may find a quicker path to sale.
• Advisory Team: An experienced M&A advisory team can streamline the process, anticipating issues and facilitating solutions.

Conclusion While the average sale takes 9 to 12 months, sellers should be prepared for a longer haul. However, with the right preparation and team, and a bit of market luck, the process could also conclude more rapidly than anticipated. Sellers must enter the M&A process with open eyes, understanding that the journey to sell a midsize business is a marathon, not a sprint.