Often, one of the first questions I get asked by clients is “how long do you expect a transaction to take?” While I would love to be able to tell them that it is going to be quick and easy, the real answer is that is probably going to take nine to 12 months to get through a transaction.
I try to divide the process into four stages for my clients:
Preparation: From the time I am retained, preparing a client for sale can take as little as one month, but sometimes can take much longer than that. Since we only have one chance to make a first impression on potential buyers, I want to make sure that we do the best job we can to work together to present the company’s data in a positive, but accurate and complete way. The length of time this takes is usually largely dependent on how prepared a company is for the transaction. On average, from the time I am retained, it takes 60-90 days to bring a company to market.
Marketing: After we are fully prepared to go to market, it takes 30-60 days to market the company, making contact with potential strategic and financial buyers who might be interested in the company. This stage typically ends with the receipt of preliminary indications of interest from multiple potential buyers.
Selection: Once companies receive interest from potential acquirers, the detailed investigation phase occurs. The buyers will want to meet you and do an additional review of the company, and you will want to learn more about those who are courting your business. Depending on how many companies we select to participate in this stage, we could spend 30-60 days working with potential buyers to enter into a firm letter of intent.
Due Diligence & Closing: After an LOI is in place, in today’s world, it typically takes 90-180 days to get to closing. During this time, the buyer will be doing due diligence and learning about your company and working with its financial sources to structure the deal. Near the end of this time period, the final documents will be drafted and the parties will close the transaction. Once again, the length of time this part of the process will take depends largely on the company’s level of preparedness for the transaction.
Unfortunately, it seems to be taking longer and longer these days to sale transactions completed. While money is flowing back into the middle market for M&A deals, the process seems to have lengthened from pre-recession time periods. Consequently, be prepared for a fairly long time commitment to get a transaction over the finish line.Share: