Gabriel Ngo
on
“You may delay, but time will not.” – Benjamin Franklin (Founding Father and polymath)
As the aforementioned quote suggests, this writing will focus on potential timelines as well as reasonable expectations of the time it takes to either buy or sell a funeral or cemetery business—when performed correctly. And just as how I had written about Succession Planning a few months ago, and how like funerals, it just doesn’t happen on its own—that it requires leadership of people active in the process and management of schedules and time. The buying and selling process is a resulting culmination of your succession planning, and it too requires time management because it simply does not happen overnight. However, before we discuss what the time costs of buying and selling businesses entail, let’s quickly review what the processes for buying and selling a business look like at a high level.
When buying a business the right way, it requires you to:
- identify a prospect,
- analyze the quality of the business and its competitive market,
- compile all relevant financial, property, operating, etc. data,
- value the business and real estate,
- underwrite your financing needs and identify the best lender and terms,
- present a logical offer to the seller and their representatives,
- position any offer so it is seen in its best light,
- work with your attorney on the transaction,
- coordinate the due diligence you and your team would need, and
- work to close on the deal.
When selling a business, it ideally requires you to:
- compile all relevant financial, property, operating, etc. data,
- value your business,
- gain an understanding of your assets after tax on the sale,
- define your role in the business after a sale,
- identify and pre-screen the list of potential buyers,
- package the information and market the business to potential buyers,
- negotiate purchase price and other material terms of the offer,
- select who you believe to be the best buyer,
- coordinate the due diligence needed by the buyer and their team (potentially their lender as well), and
- work to close on the deal.
There are ten main bullets to each of the buying and selling processes outlined above. However, each bullet potentially could have multiple sub-categories. For instance, due diligence includes everything from on-site visits of the property, title work, surveys, environmental inspections, licensing, and so on and so on. The main point being that each and every step takes time and typically a lot more time than anyone may think. Furthermore, there are controllable and uncontrollable factors that might just add even more time to the process for both buying and selling a business including: how organized the financial books are, how quickly either you or the other party can produce the documentation needed, lending processes and requirements, state and regulatory requirements and approvals. This is not even considering the length of time it takes to find appropriate buyers or sellers as well as a potential “courtship” period.
On average, the buy/sell process takes up approximately ninety to one hundred twenty days. So, if this is the average, it means that there are few that may take shorter than ninety days and there are others taking much, much longer than ninety days. The fastest acquisition I have ever taken part in was about forty days from start to finish. But this can be seen as the exception because both parties in this instance were motivated, very well-organized, and efficient. I’ve also participated in another buy/sell scenario that stretched across two to three years (and this was literally just between two parties). Often funeral and cemetery owners don’t think about or don’t realize what a material time commitment succession planning, buying, and selling a business require.
If the saying that “time is money” is to be believed, then there is plenty of time that must be invested in both buying and selling processes. The longer you procrastinate or feel frozen by indecision will only serve to add more time to processes that naturally favor the lengthy. Yet, you can certainly help yourself when you have the right representation with both knowledge and experience partnered with you…to be your guide, counselor, specialist, agent, and friend throughout the process. And while it sounds easy—buying/selling—just remember that it took you many years, and in many instances, took your family generations for your business to be what it is today. Make sure you account for the length of time that it may take when you are ready to sell your business or buy a business and ensure that you do it properly.
“If you don’t have time to do it right, when will you have time to do it over?” – John Wooden (legendary UCLA Men’s Basketball Coach)