The Sale Process

The Sale Process

The business sale process has a number of distinct stages and typically takes 6 to 10 months to complete.

The Business Sale Process

Finding the Right Buyer

Finding the Right Buyer

There are strategic and financial buyers. The best buyer is the one that benefits the most from the purchase.

Finding the Right Buyer

Valuation

Valuation

A business's value is determined by market comparables as well as business specific analysis.

Valuation

LOI

Why is the Letter of Intent (LOI) so Important?

Why is the Letter of Intent (LOI) so important? Because, in the context of a sale process, it marks the critical point where power shifts from the seller to the buyer. What I mean by this is that an LOI typically includes a term requiring exclusivity.  Exclusivity requires the seller to stop engaging with other…

Revenue Quality

Revenue Quality: What Does it Really Mean?

Revenue quality is an area of focus for buyers and venture capital/private equity investors.  High revenue quality companies are valued higher than low quality revenue companies.  But what does this really mean and why is this? It is simply a question of risk.  High quality revenues reduce risk and therefore result in a higher valuation. What…

M&A Reps and Warranties

Reps and Warranties: Common Issues and Resolutions

All Purchase and Sale agreements (“PSAs”) have sections called buyer and seller reps and warranties.  The intent of these sections is to disclose and describe any known issues in the business and to address how they will be dealt with.  It is generally accepted that any issues that come up post-sale, but that existed or…

Merger Definition

Mergers and Acquisitions Definitions: the Full List

If you have read the post: Merger & Acquisition (M&A) Acronyms, Abbreviations and Definitions then you will be familiar with the various terms used throughout the M&A process. Here we list them alphabetically and try to add a little color about their significance. Deal Fatigue: Deal fatigue refers to a condition, typically during Purchase and…

Purchase and Sale Agreement

The Purchase and Sale Agreement Explained

The Purchase and Sale Agreement (PSA or SPA in the case of a Share Purchase Agreement) is one document in a set of final documents that completes a company sale transaction.  Other documents typically include employment agreements, escrow agreements, non-competition agreements, releases, schedules and more depending on the type of transaction being contemplated. Importance of…

Examples of Acquirers Paying a Premium

5 Examples of Acquirers Paying a Premium

Five examples of acquirers paying a premium.  What are buyers looking for in acquisition targets?  The objective of an acquisition is to create value.  This is accomplished by improving profitability and/or reducing risk; both enhance earnings quality and drive value.  More specifically, acquisition objectives can include achieving economies of scale or economies of scope, vertical…