I have always been amazed by the length of time many large business sales take to complete – it's common for them to takes several months to close after the parties have reached a deal.Obviously, there can be a significant amount of due diligence, getting financing facilities into place, pre-planning logistics and even regulatory issues to overcome.
Since buying a business is a process, it's important for a prospective buyer to understand a few things:
• Losing deals is part of the process.
• The "perfect" business doesn’t exist.
• There will always be an element of uncertainty – the goal is to mitigate the risk.
• 'Analysis to paralysis' can plague anyone, no matter how eager they may be to either purchase or sell a business.
• It’s important to take your time, but not waste your time.
At the same time, you have to temper this urgency with an allowance to do a thorough review. Obviously, you cannot and must not rush to the closing table until you have the right deal in place, and your analysis is complete.
Once you have reached an agreement with a seller, you should be able to close the deal within 30-45 days including your due diligence and satisfying all deal contingencies (i.e. lease assignments, contract transfers, inventory review, client/employee meeting where necessary, etc.). Certainly, in cases where there may be third party financing required, or the sale of real estate property or certain licensing issues to address, the timing can be longer. Conversely, in simpler and smaller businesses the deals can get done in less time.
The process to buy a business is neither a sprint nor a marathon. It's more like a relay race whereby you have to reach and complete certain stages to keep the deal moving forward towards the finish line.
My friend Andy Cagnetta of Transworld Business Brokers says that, "deals are like fresh fish – the longer they sit on the counter, the smellier they get."
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