How long does it take to sell a business uk?

Posted on 06 Sep 2022, by admin

How long does it take to sell a business uk?

Selling a business in the UK can take a few months to a few years!

There is no standard time it will vary for every business. The key factors are whether the business is ready to be sold (is it “Fit to Sell”), is there already a buyer or interested parties lined up, the desire of the buyers and sellers to do a deal quickly and finally quite simply how organised and efficient everyone is. The best way to look at the time frame is to split the process up in the different stages and how long each one can take.

Stage 1: Preparation to sell. (“Fit to Sell” and “Fit for the Future”). This is potentially one of the most dependent stage. It can be relatively swift or take a long time depending on both the state of the business as well as what you want as an owner looking to sell. The aim here is to get the business in the best possible condition to be sold and ensure that this maximises the value that can be realised upon sale. For most businesses this is a process that takes a few weeks or perhaps a little longer. However a number of the businesses we work with at Dexterity Partners do so on a much longer preparation process that is over a year or longer. This is to help create a more comprehensive.

Stage 2: Research to identify prospective buyers. This is typically a quick process where we aim to understand the business and who is best suited to potentially acquire it. We look at the business profile and size, its place in the market as well as the wider market conditions and what is currently taking place in that market. The usual timeframe for this is a couple of weeks.

Stage 3: Marketing and buyer verification. Now this is often the longest step – finding a buyer for your business. There are some instances where the seller already has a buyer lined up, either they have been approached by them or there have already been discussions. This can make this step much more straightforward, but in most cases this is not the case. Finding the right buyer can take a few months in most cases and in many cases can often fail resulting in a buyer never being found. If you look at the statistics this is a reality and one that many advisors omit.
At Dexterity Partners we ensure this risk is minimised by ensuring the preparation of the business is stage 1 is done and the business is in optimal shape to be sold as well as being presented correctly to prospective buyers. The business not being “Fit to Sell” we find is the most common reason that a buyer is not found and as such is key to get right to minimise that risk.

Stage 4: Bid qualification and key terms negotiation. This is usually a couple of weeks to a month. Once you have an offer on the table there are some back and forth agreeing terms, negotiation on some finer points and ensuring the deal works well for all parties involved and everyone is in step before going onto the next stage.

Stage 5: Due diligence. The part where the buyer starts looking at the business to ensure everything they have been told matches up and is true. Here they are trying to understand the different aspects of the business and get a good grasp of both the financials and operations of the business before they sign and complete the deal. This step can vary from a month to a few months in most cases. It depends heavily on the buyer, the more work they want to do the longer it usually takes. A small business is usually quicker whereas selling a larger business to a PLC is usually the type of deal that takes months at this stage as they go into much greater depth in their work.

Stage 6: Finalisation and legal agreement (SPA signed). This is the final step of the process that happens at the end of the due diligence and after it has been completed. This can be expected to take a few weeks, maybe a month, again depending on the eagerness of both parties to push the deal over the line. Often parts of this are started before the previous stages are finished and so once the other stages are completed this one can be finalised quickly after. If this approach is taken, as is usually the case at Dexterity Partners, then the extra time here is minimal as the work is done concurrently with other stages.

Overall you should expect the process to take somewhere from 3 or 4 months on the really quick end to up to year on the slower end of things, but most deals tend to fall somewhere in the 6/7/8 months range when every stage is factored in, from deciding to sell to finally signing on the dotted line at the end.

What is critical to timing is that one person is designated to project manage the process from “Fit to Sell” to legal completion, something Dexterity Partners is uniquely experienced to do. Project management should ideally not be done by the owner or key managers who must remain focussed on maintaining business performance.

The use of multiple advisers can also result in information repetition and delays whilst each new adviser gets up to speed and no one person is driving the process and accountable for deadlines. For these reasons we believe our approach at Dexterity Partners is uniquely positioned to help accelerate the timeline whilst not sacrificing on service, as we control every step from start the legal completion

For further information and impartial advice, feel free to contact our founders at Dexterity Partners.