Think buying a business is simply about making an offer and waiting for the rest to fall into place? Even if you have the funds you might be surprised by how long the process can take.
Based on our in-depth market knowledge of a wide range of business acquisitions, the process to buy a company will take between 8 and 12 months. This is regardless of the size of the business. Bear in mind that a year-long timescale will cover everything. That is, from initial research into the market to the exchange of contracts and, ultimately, completion.
As such, some buyers need to rethink their plans about business acquisition. Many buyers have an unrealistic view of how rapidly they will be able to proceed with a purchase.
Nevertheless, it is important to understand that buying a going concern is not like buying a car. That is, working out the make and model of car you want and then filling in the financing paperwork. Frequently, buyers of businesses are purchasing something that is highly personal to the seller. It is likely to constitute something they have invested a lot of time and effort – not to mention money – into. Therefore, buying a commercial enterprise should be thought of as something akin to buying a home. You just don’t do it overnight.
Many people who have decided to buy a business are understandably keen to get on with the process. Perhaps you want to work for yourself for the first time following a redundancy package and have money to invest? There again, you might already run a business and want to acquire another in your sector to increase your market share. Alternatively, you might simply be at a loose end following the sale of your previous business and are now ready to return to the commercial fray. Whatever you reasons for acquiring an enterprise, few entrepreneurs are truly patient and most just want to get the job of buying done.
The buying process can be quicker if you have already done your homework and defined the type of business you’re looking for. If you have a scatter-gun approach, then it will take you longer to find a business that fits your model. It is ultimately down to narrowing your searches so that your focus is greater. This might include only seeking those with turnovers above a certain level or those which operate in certain market sectors. Alternatively, you might only wish to search for businesses that ply their trade in certain regions or that are franchises. The more you narrow your searches, the better the chances are for a successful early acquisition.
One sure fire way of speeding up of the process of buying a business is to look into sectors which are struggling to raise finance capital. It can be quicker to buy a business, even one that is perfectly solvent, if it happens to operate in a market that is going through tough economic times. This is because such business often find it hard to raise capital by other means, such as borrowing from banks. Indeed, owners of such companies may want to exit quickly or have been waiting for some time to find a genuine buyer.
In such cases, it is possible to expect quicker sale timescales than the average and for matters to proceed more rapidly. Nevertheless, buyers still need to realise that few business sales of this type will proceed immediately. They should come in at timescales that are beneath the national average, however.
Buyers without a realistic idea of timescales will go into the process without the right expectations. This can lead to negotiations breaking down. If you are expecting a business purchase it to take anything up to a year, then you won’t become disappointed if the procedure it drags on. All too often, buyers pull out because of perfectly reasonable minor delays caused by the seller who is simply going through their due diligence correctly. Expect the seller, or their lawyer to inspect your business dealings carefully. After all, many business owners won’t sell to just anyone. Their staff and management team ought to feel the sale is being made to an appropriate person and all this takes time.
Instead of becoming frustrated with the perception of delays and lack of will on the part of the seller, you need to maintain your focus, energy and attention on the acquisition process. If you don’t then, you can cause unwarranted delays yourself. The seller may even choose to look elsewhere or to take the business off the market all together!
Remember that business deals can fall through at any time. This is just the same with business acquisitions as it is with any other form of commerce. If you ‘put all your eggs in one basket’ and only focus on a single business that you want to buy, then you will have wasted much time if that deal fails to proceed. Therefore, you ought to have more than one option available to you. Essentially, the more time you spend researching and discovering business opportunities, the more potential targets you will have available. If one of your preferred business targets falls through at any point in the buying process, then you have an alternative to fall back on. Perhaps more than any other aspect of business acquisitions, having multiple targets helps to speed up the process most.
Having realistic expectations about the length of time it takes to buy a business is imperative for securing a successful acquisition. Here at Unloq we put our buyers in the best position to make an informed decisions. We help our clients maintain momentum throughout the process and introduce serious opportunities. If you are interested business acquisition call us on 01962 609 000, or contact our business acquisitions team through this website.
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