How long will it take to sell my business in Houston? If you’re asking this question, there are a number of factors you’ll need to consider. The time it takes to close a sale varies based on the industry, the economic climate, and a host of other factors.
Selling a company is a big step, and the process can feel overwhelming (particularly if you’re a first-timer). That’s why it’s crucial to get the right kind of legal support in your corner to ensure your business interests are protected and your peace of mind is preserved.
How Long Will It Take to Sell My Business in Houston? Factors Affecting the Sale Timeline
So, how long does it take to sell a business in Houston? The answer to this question varies, but statistics show that a healthy majority of American businesses sell after being on the market from 4 to 12 months.
Where your business falls within this range will be dictated by a number of factors. Predictably, pricing is often the biggest sticking point; you want to get as much money as possible out of the deal, while the buyer wants precisely the opposite. Many buyers also prioritize companies with low down-payment requirements. Finding common ground here can take months in some cases, particularly in bigger and more complex deals with more loose ends to tie up.
Deal terms can also cause significant delays. Buyers will be more inclined to strike a deal if you’ll make certain concessions, such as agreeing to train them, free of charge, to take over your business. Again, the bigger and more complex the deal is, the longer it’s likely to take to iron out issues here.
Macro-level factors also have a role to play. Everything in business is affected by the invisible forces of demand and supply, and the sale of companies is no different. If the economy is hot and the prospects for your business in the immediate future are bright, you’ll have a much easier time finding a buyer. In a recession, demand slows and buyers may find it more difficult to raise capital due to lending restrictions and high credit costs, and businesses take longer to sell as a result.
Buyer processes are another consideration. Every buyer will have certain background checks and other due diligence items they’ll want to complete before signing on the dotted line. However, the time this takes varies significantly from one buyer to the next.
Understanding the Process
There are two main types of business sales: an asset sale and an entity sale.
With asset sales, you transfer ownership of some part of your business, or your business property, in exchange for consideration (usually cash). You retain ownership of your company.
Entity sales, on the other hand, involve a full transfer of ownership of your company to another party. The buyer takes possession of your whole business, including any assets, liabilities, copyrights, trademarks, and other items held by your company.
For either of these sale types, there are a number of steps you’ll need to take when getting ready to transfer ownership of your business interests.
Initial Valuation
Before you sell anything, you need to know how much it’s worth. There are a few factors that will dictate the market value of your business, including its financial performance, assets, market position, and growth potential.
Preparing Your Business for Sale
To expedite the sale process and get the best possible price for your business, you need to make it as attractive as possible to potential buyers. This includes tidying up financial records, ensuring all legal paperwork is in order, and resolving any outstanding issues (such as ownership disputes) that might deter buyers.
Marketing to Potential Buyers
You have a number of options when it comes to getting the word out about selling your business, but it’s important to consider these options carefully in the context of your circumstances. For example, would you prefer to keep your proposed sale a secret from your employees? If so, you’ll obviously want to avoid public marketplaces.
A reputable business broker with a network of industry contacts will be able to help you find potential buyers for your company and will know how to market your business without letting the entire industry know it’s up for sale. A broker will also be able to pre-qualify buyers on your behalf, potentially saving you significant time and stress.
Regardless of the platform you choose to market on, you should prepare a selling memorandum that highlights the strengths and potential of your business, including financial summaries, market position, and growth opportunities. When a potential buyer expresses interest, having this memo to hand will ensure you can put your strongest possible pitch in front of them without wasting any time.
Tips for Speeding Up the Sale Process
If you’re in a rush to make your exit, the first thing to be aware of is that this may compromise your position at the negotiating table. Nobody wants a sale to drag on for longer than it needs to, but, equally, you may need to show patience if you want to get the best possible payout. Even if time is of the essence for you, you should not let this become public knowledge.
With this in mind, there are various things you can do to expedite the sale process, such as:
- Gathering documents: Make copies of all your important business documents as soon as you make the decision to sell, including financial statements for the last three years, any relevant trademarks or copyrights, and customer and vendor lists, among others.
- Preparing for common questions: You may need to speak to a number of prospective buyers during the process, and a lot of these will seek the same information. Be ready to explain things like your relationships with vendors and customers, whether your business is involved in any pending litigation, and whether your line of work involves any licensing processes or other types of interaction with government bodies.
- Enlisting professional help: A DIY business sale is possible, but it comes with a lot of risk. If you’re not familiar with contracts, compliance, and other such legal issues, you should consider approaching a transactions attorney to help you through the process.
Hiring a Law Firm You Can Trust When Selling a Business in Houston
Selling your business in Houston can seem like a complex process, but it doesn’t need to be overly stressful. If you choose to work with us, our lawyers can answer any questions you have and ensure that all your concerns are addressed.
Contact us today to discuss your situation in detail and take the first steps toward closing your sale. You can call us at (713) 666-1981 or reach out to us via the contact form on our website. We offer free initial consultations over the phone.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
