This article are provided for information purposes only, and are not intended as legal advice.


What price of a business is easiest to sell?

May 20th, 2010

What is the easiest size of business to sell ?  When you sell your house, depending on the city and the price of the house that you live in, you can sell it in a day or in a year.  When you sell a business, it is rare that you would sell your business in a day, on average, it takes six to twelve months to sell your business.

 

The length of time it takes to sell a business is dependent on several different factors, predominantly price and location.  There are, in my opinion, three different price levels:  businesses under $300,000 in price, from $300,000 to $1 million and over $1 million in selling price.  These prices assume that the business is reasonably priced.   If a person is buying a business under $300,000, they may have some equity in their house plus cash so that they may be able to pay for the business using cash and debt arranged through the house refinancing or through friends and family.

 

Under $300,000, the financing is not that difficult and these type of businesses sell reasonably quickly.  Mind you, there are many people who want to buy a business that have no money.  Those do not fall into my descriptions above.  I am referring to serious investor who is realistic and has been planning and saving to buy a business for a while.

 

The next level in my opinion is a very difficult price range to sell a business from $300,000 to $1 million in selling price.  For many individuals, they may not be able to borrow enough money to buy this business. They can leverage their house and borrow an extra $100,000 to $200,000 plus their cash which they have but the asking price is a little above their borrowing abilities especially once you get to the middle to the upper end of this range.  For a large player, the purchase price is too small therefore they are not interested in this price range.  For the small person, this is too expensive therefore the number of  buyers of businesses in this price range is smaller than the first price range.

 

When the purchase price exceeds $1 million, you get a different purchaser, one who is more seasoned, may have purchased many businesses in the past, knows what they are looking for and will move quickly once they find a business which meets their investment criteria.  These are the easiest sellers to work with.


Filed under: Selling a business — Gary Landa @ 9:13 am


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