How to quickly sell your business? Whether you are selling your business out of necessity or opportunity, speed is pivotal.
There are a variety of risks and advantages directly tied to the time it takes to sell a business. Everything is at stake. Yet, being one of the most unique types of business transactions, acquisitions can take anywhere from a few weeks to a couple of years. The mayhem that uncertainty can hit you and your company can be devastating alone.
So, how can you more skillfully master the M&A process, and speed it up?
Remember that mastering the storytelling side and how you are positioning your business is critical when it comes to engaging and speeding up the process. This is done via your acquisition memorandum. This is super important to reach a successful acquisition. For a winning acquisition, memorandum template take a look at the one I recently covered (see it here) or unlock the acquisition memorandum template directly below.
Here is the content that we will cover in this post. Let’s get started.
- 1. When To Research How to Quickly Sell Your Business
- 2. The Importance Of Speed In Selling Your Business
- 3. Changing Economy
- 4. Changing Industry
- 5. Changing M&A Market
- 6. Competition
- 7. What Takes Time In Selling A Business?
- 8. Preparing & Optimizing Your Business For Sale
- 9. Preparing Your Marketing Materials
- 10. Finding & Building Relationships With The Ideal Buyers
- 11. Negotiating
- 12. Due Diligence
- 13. Financing
- 14. How To Speed Up The Sale Of Your Business
- 15. Be Organized From The Start
- 16. Understand Your Target Buyers
- 17. Hack Your Way To Introductions & Relationships With Buyers
- 18. Get Your People On Board
- 19. Be Clear About What You Want & Need In A Sale
- 20. Be Hyper Responsive In Due Diligence
- 21. Have A Clear Plan Of What’s Next For You
- 22. Summary
When To Research How to Quickly Sell Your Business
There are a wide variety of reasons to sell a business, including the following.
- Your company is in financial difficulties
- Your business is maturing
- You’ve received an offer too good to refuse
- You are ready to move on to something else
If your company is struggling there are options. You don’t just have to fold it, close the doors and give up. You may have value in assets, IP, or talent that is worth something to others. It’s better to explore the potential for a sale first.
When the outlook for growth may be slowing it may also be a wise time to seize on the opportunity to take advantage of your current worth and traction to sell for a premium.
Maybe you’ve already received unsolicited inbound offers. With the right help negotiating the deal it may be worth exploring. Even if it is far earlier than you planned to exit.
In other cases, you may just be ready to move on. Perhaps your investors have taken the business in a direction you don’t approve of. Or you may be bored, or have just found a more exciting new idea for which the timing is right to jump on.
In other situations merging with another company is simply the best way to protect what you’ve built and grown it, and empower it to its full potential.
Keep in mind that in fundraising or selling a business, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
The Importance Of Speed In Selling Your Business
While this is anything but a 15-minute delivery or two-day free shipping experience for acquirers, speed is extremely important when it comes to selling a business. The faster you can get through this process the better.
These are some of the reasons that speed is so important in M&A.
Even if you didn’t have to live through the dot com bust or Great Recession of 2008, you’ve probably experienced the economic side effects of the COVID pandemic.
Things can change incredibly fast. In just a matter of weeks, a customer base can disappear. Even if you have the financial reserves to live through it, selling before something like this happens can be far more appealing. Otherwise, if the bottom drops out you might be lucky to sell for pennies on the dollar.
Technology is changing things extremely quickly. Some manage to innovate, pivot, and adapt in time, others don’t. In just the past couple of years, entirely new industries and markets have been born. Others have become dinosaurs.
Those who miss the timing can find their assets and businesses can lose billions of dollars in value in almost no time at all. Or they are displaced by new disruptive startups which make them redundant. This is why you should learn how to quickly sell your business.
Changing M&A Market
The above and a variety of other factors can just as quickly impact the mergers and acquisitions space.
Many highly successful entrepreneurs have found that if they had waited two more months to exit they might have lost everything.
The availability of venture capital, leveraged buyout financing, and the appetite for making acquisitions are always shifting. In some moments the deals handed out can seem ridiculously good. Then in others, it may not matter how great your business is if no one is buying, investing, or lending at all.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
Startups are launching and growing at an unprecedented pace. Along with the above factors, it can mean a competing company is popping up like an appetizing acquisition in the middle of your transaction. You don’t want your deal to fall apart after all of the time and work and investment, and divulging all of your sensitive data. Especially if that buyer goes and acquires your competitor instead.
What Takes Time In Selling A Business?
In order to understand how to quickly sell your business, you have to first learn what factors can influence the timeline.
Preparing & Optimizing Your Business For Sale
How fast the M&A process goes is substantially reliant on how well prepared you are.
Is your business organized and cleaned up for an acquisition? Is it already optimized? If not, it could take months just to get your business in shape, and ready to justify the best price and terms.
This can include everything from your business structure to the financials, contracts, technologies, and systems you are using.
Preparing Your Marketing Materials
Whether you’ve already received an inbound offer and just need to shop around for the best deal, or you are planning to pitch targeted buyers, there is a lot of value to be gained and lost in the presentation.
Not only does this apply to your pitch and pitch book, but the same goes for providing and presenting everything you have in your data room for due diligence.
Some can do this in days. Others languish in this phase, trying to perfect it for months.
Finding & Building Relationships With The Ideal Buyers
Even once you’ve decided to sell your business, and you’ve prepared, it can take time to make the right connections with decision-makers and to build solid relationships with your preferred acquirers.
This is a process that can often take months. In some of those big acquisitions you see in the headlines, the founders and CEOs of their acquirers have already known each other for years.
Negotiations can take time. Not only may you be negotiating with your buyer, and their teams of lawyers and M&A staff, but also with your own investors and shareholders internally.
Renegotiations are also very common. The longer the transaction goes, the cycle of re-negotiating can become a vicious and self-propelling spiral.
The most time-consuming part of selling a business is typically due diligence. This alone can take months. The less organized you are, the riskier the deal looks to the buyer, and the longer the list of items to provide in your LOI and sale agreement the longer this will take.
If the buyer is using financing to buy your company it may also take them months to secure this funding themselves. It will probably also require more due diligence.
In addition to these items, highly regulated spaces and large mergers may require various levels of government or agency approvals.
The most critical facet of selling the venture is knowing how to value the company. For more information about how to estimate the right asking price, check out this video I have created. You’re sure to find it helpful.
How To Speed Up The Sale Of Your Business
Fortunately, there is a lot you learn about how to quickly sell your business..
Be Organized From The Start
Right from the initial planning stages of your startup is the time to begin organizing and strategizing for this moment. If you are just starting now, you’ve got a lot of catching up to do, and you are going to need some help.
Understand Your Target Buyers
Understand who your ideal buyers are. Know what is most important to them. What creates the most value, and reduces the most risk for them? Make sure you position for this to streamline the entire process. They will be more motivated, have a greater sense of urgency, and will be willing to push things through more quickly.
Hack Your Way To Introductions & Relationships With Buyers
If you are behind on this, then you need to find ways to hack time. Getting warm introductions to your preferred buyers is a great way to achieve this. It instills more trust and likability from the beginning. If you don’t have the right paths through your existing network, leverage professional M&A advisors.
Get Your People On Board
Some of the biggest roadblocks and drags on an exit can often come from inside your own organization.
This may be getting all of your shareholders to vote on approving the merger or sale. It could be your co-founders or team members that are supposed to be firing on all cylinders to boost your performance through the closing.
Get your team, shareholders, and board on board in advance.
Be Clear About What You Want & Need In A Sale
Know your absolute musts and must-nots in this transaction before you even entertain conversations about it. Differentiate your musts from the nice to haves. Be clear on what you will take and what not. It will guide you, and streamline negotiations. While eliminating dead-end talks and offers.
Shortlist your essentials, and keep them visible to you. Back out your negotiations from this, to be able to give and take to craft the deal you really want most, while making the other side feel good about the process and deal too.
Be Hyper Responsive In Due Diligence
Due diligence can be the longest and most consuming phase of selling your business. Your agreements should list in detail the items the buyer has access to. Before you even start you should have all your data organized and in your virtual data room.
When there are additional requests and questions respond immediately to keep the ball moving.
This is again going to require having your team on board, including external advisors and professional services.
You will probably need a dedicated team of experts just to handle the M&A process, as you need to focus on keeping up and growing your business even more than before.
Have A Clear Plan Of What’s Next For You
Second-guessing yourself and the deal, or even self-sabotaging it can happen if you don’t have a clear path forward. Don’t rob yourself of that future by clinging to the past.
Have a clear plan for what you will do after the exit. Including any time you will take off, items you will cross off your bucket list, and how you will find and begin your next project.
Do this to ensure that you keep your eye on the ball and bigger picture, and stay objective on the tough days.
Learning how to quickly sell your business is important. There is a lot at stake. Time is of the essence. An M&A process that drags out becomes a liability, drain, and decreasing odds of closing.
Understand what takes time in the process, as well as what you can do to streamline it, and accelerate the sale of your business for a fast and more profitable deal.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.