The process of selling a business can be broken down into two phases:
Phase 1 is creating a sellable business. This is when you build something that can be sold by developing predictable revenue and profit and ensuring the business isn't reliant on you, the owner. Phase 1 takes years or decades to complete.
Phase 2 is pro-actively selling a business. Assuming you don't want to pass it on to your kids or sell it to your management team, you may choose to engage a third-party agent, as most entrepreneurs do, to help you find a buyer. I asked Perry Miele, chairman of Beringer Capital and one of Toronto's mid-market deal makers, how long it takes him to sell a business. "From the day you engage an adviser to having a cheque in your hands usually takes about six to eight months."
Why does it take that long? "When we sell a business," Mr. Miele says, "we spend the first few weeks building an information kit for potential buyers to review. It then takes weeks to solicit interest as they review the information package. Interested bidders will want to have management presentations, which can take weeks to set up, given the need to choreograph the schedules. Once an offer is accepted, there is usually a two- to three-month due-diligence period."
Deal making is done by the most senior people at both companies. Senior staff are busy running their businesses, which makes selling (or buying) a protracted process.
It seems that when it comes to selling a business, as in life, nine women can't produce a baby in one month.
Special to the Globe and Mail
John Warrillow is an entrepreneur, author and speaker who has started and exited four companies. He most recently transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to the Corporate Executive Board in 2008. He is the author of Drilling for Gold (Wiley, New York 2002), and in 2008 he was recognized by BtoB Magazine's "Who's Who" list as one of America's most influential business-to-business marketers. Mr. Warrillow is currently working on his next book, Built To Sell: Turn Your Business Into One You Can Sell , due for release on Feb. 1, 2010.