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How Long do Buyers of Businesses Stay in the Market?

What’s the timeline for a buyer to make a decision on pursuing a business acquisition or calling off their search? Let’s delve into this question.

Buyers typically fall into two categories: companies and individuals.

Companies: When companies opt for growth through acquisitions rather than organic expansion, they often remain active in the market indefinitely, or until their strategy shifts. Unlike individuals who might be casually exploring, companies are more committed. Financial buyers, as part of their fund-management process, continually engage in acquisitions. However, this varies depending on their fund’s lifecycle and composition. Private equity groups, with multiple funds in varying stages, are in a perpetual quest for acquisitions.

Individuals: The duration individual buyers stay in the market varies greatly due to various factors. Some remain active for years.

What factors impact an individual’s time in the market? Is there a distinction between novice buyers and experienced business owners? When does the search duration become excessive? How can a buyer’s level of motivation be gauged? And how can one avoid those who are just exploring?

If you’re selling your business, understanding these distinct buyer types, their motivations, and viewpoints can illuminate their behavior. Armed with this insight, you can better assess whether a buyer is genuinely committed or merely testing the waters.

Curious to learn more? Keep reading.


Now, let’s focus on companies.

Companies Growing Through Acquisitions

After making the decision to pursue growth through acquisitions rather than organic means, companies typically remain active in the market indefinitely, unless their strategy shifts. Unlike individuals, companies are more committed and less likely to engage in casual exploration.

Financial Buyers

Private equity groups (PEGs) and other financial buyers consistently engage in company acquisitions as an integral part of their fund-management process. This activity varies depending on the current lifecycle stage of their fund. Given that most private equity groups operate multiple funds at different developmental phases, they maintain an ongoing pursuit of suitable acquisitions.


Now, let’s delve into individual buyers.

The duration for which individual buyers remain active in the market varies significantly, influenced by several key factors. It’s important to note that many business owners may not realize the extended timeframe during which individual buyers continue their search for a suitable business. In fact, some individual buyers persistently engage in the market for multiple years.

Let’s explore the contributing factors in detail.

Motivation Level

Buyers’ motivations exhibit a wide spectrum. Certain buyers display strong determination, defining clear goals and swiftly executing a business purchase. In contrast, there are buyers who make impulsive decisions, prompted by a difficult day at their current job, only to reconsider the next week. Such buyers frequently enter and exit the market.

First-Time Buyers vs. Previous Business Owners

Buyers with prior business ownership experience are adept at navigating decisions even with incomplete information. Their likelihood of extending an offer for a business is higher compared to those new to business ownership. These experienced buyers recognize that no business is flawless, acknowledging that they wouldn’t have sold their own business if it were “perfect.”

On the flip side, employees often lack the perspective of being a business owner. Their familiarity with decisions rooted in limited data or intuition might be limited. Moreover, being current employees, they inherently lean towards risk aversion. Consequently, they are less inclined to submit offers for a business compared to those who have previously owned a business.

The Lure of the American Dream

The desire to own a business is widespread. If you ask the average American about their aspirations, many will express a dream of becoming an entrepreneur. American culture actively celebrates self-made business owners, showcasing them through various media channels like newspapers, magazines, movies, social media, and online platforms.

Names like Elon Musk, Bill Gates, Mark Zuckerberg, Richard Branson, Larry Page, Henry Ford, Thomas Edison, Andrew Carnegie, Jeff Bezos, Sam Walton are familiar, with their created companies echoing in almost every American’s mind.

However, lesser-known figures like Douglas McMillon, Rex Tillerson, John Hammergren, Stephen Hemsley, Larry Merlo, Mary Barra may not ring a bell. Despite having led Fortune 50 companies as CEOs, they often remain unrecognized. This discrepancy arises because entrepreneurs are revered, whereas CEOs are frequently overlooked.

In the American Dream, business ownership takes precedence over landing the perfect job. Consequently, numerous individuals aim to acquire a business. Yet, the unfortunate reality is that most won’t take the plunge—this is why it’s coined the American “Dream” and not the American “Reality.” Our estimation suggests that less than 5% of individuals aspiring to buy a business will actually accomplish that goal.


A significant number of buyers tend to hold unrealistic expectations when it comes to the necessary capital for acquiring a business. In reality, many of them lack sufficient capital to make the purchase. This often leads to extended periods of time spent in the market, as they grapple with the challenge of inadequate liquid funds required for buying a business. These buyers, who are undercapitalized, might submit offers contingent on bank financing. However, it’s worth noting that a majority of these deals face rejection by banks, often several months down the line.

Deals Gone Wrong

Additionally, there are instances when a deal encounters challenges. A buyer extends an offer for a business, and the seller agrees. Subsequently, the buyer dedicates significant time to negotiate terms and conduct thorough due diligence, only to witness the transaction unravel due to various factors. A considerable portion of these buyers chooses to re-engage with the market at a later point.

Beware of Buyers Who Have Been Looking Too Long

Be cautious of buyers who linger in the market for an extended period. Buyers often prolong their search for two primary reasons:

  • The pursuit of a flawless business: Many buyers seek a business without any shortcomings. However, such a business is practically non-existent. If it were available, it would likely not be up for sale or would have been swiftly acquired by a friend or competitor.
  • Aversion to risk: Fear of taking the leap holds back numerous buyers. Acquiring a business demands confronting one’s fears and making a decisive move. Eventually, the trigger must be pulled. Unfortunately, for many first-time buyers, the prospect of writing a multimillion-dollar check is an intimidating proposition.

Numerous buyers set a New Year’s resolution to purchase a business. We encountered an individual who aimed to buy a business within a year. He even created an email address like BuyABusinessin2xxx@gmail.com at the start of the year. However, he had to change his email address three times because it took him three years to finally acquire a business.

Practical Applications


Once you grasp the nature of the buyer you’re engaging with—understanding their behaviors and expectations—it’s time to delve deeper. Just as buyers conduct due diligence on you and your business, it’s imperative that you conduct due diligence on them. Part of your initial research should involve evaluating the buyer’s motivations.

How evident is their motivation? Do they promptly respond to your calls and emails? Are they enthusiastic about progressing, or do they tend to excessively criticize your business?

We often encounter buyers who exhibit excessive criticism, bordering on cynicism, as if to establish intellectual superiority. They might take pleasure in dissecting your business. However, this critical attitude might signify that they lack genuine intentions to buy.

Have you ever test-driven a car, visited an open house, or engaged in “window shopping” for a pricey item you had no intention of purchasing? If so, you probably came across as detached, overly critical, or skeptical to the salesperson. You might have analyzed the test drive’s quality or commented on the room size during the open house. Authentic interest likely didn’t shine through. Similarly, prospective business buyers emit unmistakable signals of their intent.

What’s the most accurate way to gauge a buyer’s level of motivation? A motivated buyer willingly tackles obstacles. They promptly return calls and emails. Despite potential hurdles, they radiate enthusiasm to move forward. You won’t need to chase after motivated buyers; instead, they’ll eagerly pursue you.

In 1964, Justice Potter Stewart was asked to define hard-core pornography, and he replied: “I shall not today attempt further to define the kinds of material I understand to be embraced… but I know it when I see it…”

Our stance is akin when identifying a motivated buyer. We can recognize one when we encounter them. If uncertainty lingers, chances are they aren’t genuinely committed to buying a business.

First-Time Buyers vs. Previous Business Owners

First-time buyers can be excellent prospects, assuming they commit to the purchase. However, evaluating their risk tolerance is challenging. Feeble motivation can easily be outweighed by apprehensions. Since every business purchase carries inherent risk, it requires facing fears head-on. A buyer will only take the plunge if they conquer their apprehensions.

For Previous Business Owners

Buyers who have already experienced business ownership and pursued the American Dream tend to display clearer motivation. Their expectations are generally more grounded compared to those who haven’t had such experience.

Financial Assessment

Evaluating a buyer’s financial readiness is straightforward.

Ask them two fundamental questions:

  1. How much liquid cash do you possess?
  2. What is your net worth?


Buyers should possess the capability to spot a business and extend an offer within six to 12 months. Completing the purchase process and closing the deal should ideally occur within a year of initiating the process. Any buyer exceeding this timeframe might encounter issues.

At times, we come across buyers who have been in the market for one to two years. Typically, we consider a buyer’s viability to be compromised if their search surpasses two years. The span of one to two years is a 50-50 proposition.

It’s important to note that a buyer’s search duration significantly differs from the potential time your business might spend on the market. How long it takes to sell your business is a distinct matter. This discussion revolves around the factors influencing a buyer’s search duration for the right business. Enhancing your understanding of potential buyers will significantly enhance your success in selling your business.

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