It’s one of the first questions owners ask when they decide to list their company for sale: how long will it take to sell? The answer, as always for important questions, is “it depends.” Some of the factors that make for a quick close are out of your control, but a good portion of what matters is very much in your control. Here’s how you can help a deal move quickly.
First and foremost, make sure your files, tax returns, and other financial records are in order before you offer your franchise for sale. Having everything cleaned up and well-organized will make the diligence process much quicker and easier for everyone involved. Taking the time to do this over a few weeks means you don’t have to drop everything during a busy workday to look for documents your buyer or the lender needs.
Make sure you have the right staff in the right roles. A new buyer doesn’t want to buy a 50-hour work week; they want to buy a well-run business with enough staff to run efficiently. They don’t want to inherit problems of any type, if they can help it, so if your facility or operation needs fixing, do it before you put the business on the market.
An experienced broker can help you get ready for the diligence process. Most buyers and lenders ask for the same information and have similar questions; your broker can develop a list of what they’ll be asking for so you can respond quickly. Most deals are held up by one or both parties’ response time for questions and documents. Being able to turn around requests within hours will make a big difference in how quickly you can close the sale.
Your broker may also help move things along by getting your business pre-qualified with a lender. Knowing that a buyer will be able to get financing will make your company more attractive when it goes on the market. That’s another reason to work with a broker who’s got experience in your industry or with your franchise; they’ll know which lenders are familiar with your business model and have a strong track record with loans similar to the one your deal requires.
You’re also in control of how you price your company. Many owners make the mistake of pricing their company above its true value, thinking a buyer will negotiate down to the genuine sale price. In reality, serious buyers simply pass over companies that are over-priced. The only buyers that you’ll attract are those that aren’t experienced enough to know better. It can lead to a significant waste of your time. Putting your business on the market at the right time and for the right price will attract more qualified buyers sooner.
Those factors are all in your control, including choosing to work with a business intermediary who can help you avoid pitfalls and keep the deal moving. Here’s what’s not in your control.
The buyer and seller aren’t the only two parties in a deal. There is also a team of people who are essential to getting things done: lenders, attorneys, accountants, equipment lessors, and landlords. Each one has an important role to play, and their response time will vary widely. (In every deal, it seems like there’s always some essential professional who just left for vacation.)
Landlords can sometimes hold up a deal, especially if they’re large, complex, and not local. They’re not always motivated to respond quickly, since for the most part, nothing changes for them but the name on the lease.
Your franchisor may also take time to approve the deal. All franchisors vet potential buyers, and some, like restaurants and The UPS Store, have a lengthy process which includes training before new owners can finalize the purchase. Scheduling the screening, approval, and training can take a while.
Realistically, if everything goes smoothly and everyone does what they need to, you can expect your franchise sale to take about 4 months or longer to close. Doing your part as an owner in advance and during the sales process can make a big difference in how long it takes and how smoothly the transition goes.