Over the years we have helped to manage a large number of business transactions, and at the outset of each one, we are always asked two questions: how long will it take, and what are the steps. While there is no fixed answer to either of these inquiries, there are some usual patterns that we can pick out –with a general sell-side M & A process timeline that gives you an idea of what to expect when you sell your business.
The first part of the process is the evaluation. It is here where you as the seller will set out your goals with the sale of the business, and get a reasonable expectation of what you can achieve in the mergers and acquisitions market. This can take anywhere between one and four weeks, depending on the complexity of the operations and your unique aspirations.
As part of the process of valuing the business, and with significant overlap with the first step, is data collection. During this stage, you will need to get all of your documentation in order: contracts with suppliers, customer agreements, employee terms, property leases, warranties on equipment –anything and everything to do with the running of your operations. This can also take several weeks, so we place this on the timeline between weeks two and five.
Now we have everything ready to sell, we need to start looking for buyers. Before you enter the market, it is important to know what kind of buyer you want to engage with –do you simply want a quick exit and are happy with a private equity buyer? Would you rather take a little longer and know that your business is in good hands and that your employees and customers will be well looked after? We usually assign this phase to weeks five to ten –it is dependent on many factors, including location, other businesses on the market, and even global economics.
Once we get an idea of the type of buyer you would prefer, we can start to market your business –this can take the form of directly approaching likely interested parties, listing on business transaction marketplaces, or introducing your business to our pool of established buyers. This is usually an ongoing process that can take between weeks 6 and 20 of the timeline.
When we start receiving responses from potential buyers, we can start to negotiate. It is at this stage that you will find out how reasonable your expectations are –both in terms of price and other benefits/conditions. The negotiation process will conclude the marketing phase –once we complete negotiations, we can cease market activities –therefore this phase usually sits around weeks seventeen through twenty.
Deal and Tax Structuring
This is where we hammer out the details of the deal and choose an appropriate tax structure, taking into account the results of the negotiation phase. This process can take several weeks and sits on our timeline between weeks 20 and 26.
Buyer Due Diligence
Your buyer will need to conduct extensive due diligence on the company before they sign on the dotted line –this will include scrutiny of your accounts, financial record, assets, debts, and any other aspect of the company that could affect profitability. Depending on the quality of your record-keeping, this can take anywhere from two to ten weeks to complete.
At the end of the timeline is the sale completion. Legal documents will be exchanged and signed, and the business will transition to new ownership. This is typically completed fairly quickly after the other steps have been taken and completes our timeline between weeks twenty-eight and thirty.