Chapter 5 - Timescales and Statistics
When asked "How long does it take to buy a business?" I frequently respond with the old adage, ‘How long is a piece of string?’ This is not a particularly helpful answer, but it is at least an honest one. When new to the business buying process, I quickly learned that the financial data the Seller makes available provides some clues to a possible timescale but a multitude of other factors will impact the length of a particular business sale process. Statistics for the Actual Business Sale Process The first thing to understand is a few statistics to have a feel for how the business sale process actually pans out in reality: 8.2 Months - The International Business Brokers Association (IBBA) states that based on their research, the average business sells in 8.2 months. (It is important to note that these are averages so for larger, more complex businesses the time can actually be much longer). 75% Post Heads of Terms/Letter of Intent Drop Out Rate - The IBBA also reports that 75% of business sale transactions fall through 'after' offers are agreed upon between Buyer and Seller during the due diligence and contract phase. Yes, mathematically this means each Buyer on average will have three false starts (the fourth one wins) before getting to the end if they are even in the percentage of businesses that complete a successful transaction.
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