Exiting Your Business, by the Numbers
One of the joys of building a buisness is knowing that you have created something of value. Perhaps you want to leave to your children to inherit. Or maybe you want to sell the business and exit with a nice chunk of money.
If you’re thinking about selling your business — maybe sometime in the future — it’s helpful to know a few statistics about what you can expect.
- 9 months – Nine months is how long it is taking on average to sell a business. That’s from a February 2008 survey
- 10% commission – You’ll likely pay a 10% commission to a businesb broker if you hire one. If a business sells for more than $1 Million, ask for a stepped However, Don’t be tempted to eliminate a broker to save money — it smarter and it could be more cost effective to use a broker.
- 6% — The commission you can expect to be charged on any real estate associated with your business is typically 6%, in keeping with a standard realtor’s commission.
- 10-8-6-4 – This is the Double Lehman scale of charging commissions for businesses that go for more than $1 Million in selling price. The commission scale is 10% on the first million, 8% on the second million, 6% on the third million and 4% on the remainder. As per Ney Grant, a business broker, in his column at AllBusiness.com.
- $250,000 – A quarter million is the median asking price for small busineses in the United States, according to BizBuySell.com as of Q1 2008. (Median means half are above that amount, and half below.) BizBuySell handles about 90% of the broker listings in the U.S.
- $400,000 – This is the median annual revenue of small businesses in the United States listed for sale at BizBuySell.com, as of Q1 2008.
I was actually surprised by the median prices and annual revenues, above. Somehow I had the idea that businesses being sold would be much bigger.
Anyway, good stats to consider if you plan to sell your business sooner or later. Be sure to bookmark this post for later reference.
