Facts & Statistics on Selling a Business

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It generally takes on average, between five to eight months to sell most businesses. Keep in mind this is an average time frame dependent on the industry, size of company, revenue etc. Some businesses will take longer to sell, while others can sell in a much shorter period of time. 

The sooner you can get to agreeable terms & have all the information needed to begin the due diligence  process, the shorter that time period  can be. 

Utilizing Seller Financing as part of the deal structure for example is a sure way to expedite the closing process. By utilizing this method a deal can be completed within 30 days vs. 5-8 months.

• 90% of all of the people who begin the search to buy a business never complete a transaction.

• Only 20% of all of the businesses listed for sale ever sell.

• Business brokers are only involved in 10% of all deals.

• 50% of all transactions agreed to between the buyer and seller fall apart during the due diligence stage and never close.

• Based on statistics only 30% of businesses on the market actually sell.

Surveys have shown that a seller, who asks for all cash, receives on average only 70% of their asking price, while sellers who accept terms receive on average 86% of their asking price. 

In many cases, businesses that are listed for all cash just don't sell. Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases it can greatly increase the amount received. 

At any given time there are approximately 50,000 businesses for sale within the U.S., Seller financing certainly is an effective way to make a deal happen.

For some deals, the business for sale does not meet the buyer's criteria once they’ve had the opportunity to really dig into the business. A common reason is that there is no real management team in place to run the actual day to day operations. That type of scenario only works if you are looking to be an owner/ operator vs. an owner/ investor.

Financials that cannot be proven will also be a major component. There may also be problems with the business internally which were not disclosed earlier that can also derail a deal. 

Some sellers are not able to provide adequate documentation that the buyer needs to complete the deal. (Titles, Leases, Vendor Agreements etc.)

• Businesses with sales under $500,000 and fewer than 4 employees have an estimated 20% chance of selling.

• Businesses with sales of $500,000–$1,000,000 and 5–9 employees have an estimated 20% chance of selling.

• Businesses with sales of $1,000,000–$2,500,000 and 10–19 employees have an estimated 25% chance of selling.

• Businesses with sales of $2,500,000–$10,000,000 and 20–100 employees have an estimated 33% chance of selling.

Statistically, many business owners have little to No Exit Strategy or planning in place, despite that 80-90 % of their assets are in the business itself. 

Planning ahead for selling your business is vital for a successful transaction to occur. 

According to various data gathering sources, approximately 70% of business owners are less than ready to sell within the next 5-10 years. 

Only 20 % to 30% of those businesses that end up on the market will sell. Essentially, only 25% of all "viable" businesses succeed & make it to a closing. For the  remaining 75% of business owners, they will never truly maximize their asset unfortunately.