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How to Sell a Business FAST

When selling your business, time is always of the essence.  We often tell sellers that there is a greater likelihood of something happening to make your buyer lower their price versus increasing it during a transaction. It is in the seller’s best interest to move as quickly as possible.

But what if time is a critical factor and you need to sell your business very quickly?

Selling a business is a complicated process but there are ways that you can increase the speed with which it happens.

Assuming you want full value for your business, here are some things you can do to speed up the process:
  • Have a complete set of financial records – ideally audited or reviewed by an accounting firm.  Have records going back 3 to 5 years, as well as current financial statements. Also have a complete list of current customers. Other documents to assemble and review include leases, patents, loans, contracts, and any valuation or environmental reports.
  • Enter into negotiations with a neutral perspective. One of the biggest time wasters in a transaction is either side starting the process substantially in their favor, knowing all along that they will eventually compromise. Of course, you negotiate during a sale process, but if both sides start closer to the middle, you will save time. This applies to the purchase price, but also terms and conditions in the Purchase Agreement. 
  • Hire M&A professionals. You don’t want anyone learning how to sell a business on your dime. Things will move most quickly when you have qualified people with a long track record of success on your team. Make sure your lawyer is a transaction attorney experienced in M&A. This will save you from having to create documents from scratch. Make sure you hire a qualified investment bank or M&A advisor. Use your advisors’ knowledge to determine what “market” prices, and terms and conditions are. This, will allow you to negotiate from a position of strength while also being realistic. In addition, investment bankers come with knowledge about buyers that will be important.  To move quickly, you need to know who the buyers are and how to get ahold of them.
  • Skip the Letter of Intent (LOI) – a letter of intent is a term sheet that you negotiate with a party regarding final purchase terms. They are generally not binding (with the exception of both parties agreeing to keep the potential transaction confidential and an exclusivity provision). These documents generally outline the terms of the transaction but discussions can become quite complex. If you are really short on time, you can save your negotiating for the purchase agreement.
    • Note: if both sides are really dug in and negotiating unreasonable positions, a LOI can save you time because it gives the attorney that drafts the purchase agreement a document of items both parties have agreed to. If however you have established a price and basic terms between the parties and feel that you can reasonably work through the remaining issues in a purchase agreement, the LOI might not be necessary.
  • Talk to your professional advisors about messaging around the speed of the transaction. It is helpful to be upfront about your desire to sell quickly. You may want to establish an aggressive timeline that you share with potential buyers. Some of them will bow out of a sale process immediately once they know they are unable to meet your time restrictions. This saves you from entertaining those buyers. For the buyers that remain, they will be aware of your schedule upfront and will enter into the transaction knowing that speed is of the essence. 
  • Have documentation and support for any addbacks to EBITDA. To increase EBITDA, many sellers include addbacks or one-time expenses to the bottom line. These are generally expenses that a new owner would not incur. They can be a tricky part of due diligence if you don’t have proper documentation. It is difficult to add back one-time set up expense for a new CRM system if you haven’t kept track of consultant expenses, down time, one-time fees, etc. 

Remember the average time for a lower middle market business sale is approximately 9 months. This means that even a very fast transaction, done well, is still going to take you 5 or 6 months. There are many reasons as a seller, it is advantageous to move quickly during a sale, and sell your business fast (confidentiality and momentum are key). In order to drive the pace of the deal, you will need to be organized and have the right advisors.

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