Category Archives: The Sale Process

How long does it take to sell a company

How Long Does it Take to Sell a Business?

How long does it take to sell a business?  Milestones in a sale process are outlined in the following chart. Milestone          Timeframe Preparation of the marketing materials (by the advisor in concert with the seller) and due diligence materials (by the seller). The documentation including a teaser, CIM and buyer list,…

Selling a Small Business

What are the Steps in Selling a Business?

Steps in selling a business include four phases of progressive information release to smaller and smaller audiences. Phase 1: Prepare Marketing Materials The first document used is called a teaser and is typically only one to three pages in length.  The teaser is a “blind” (i.e. it should include no specific information from which the company name…

earn-out

Form of Payment; Should You Accept an Earn-Out?

Public company take-over bids typically consist of all cash or a combination of cash and shares.  Consideration in private company acquisitions will usually include a sizable portion in cash (50 to 100%) but will often include an unsecured note and/or an earn-out as well.  This is typically because: (i) the buyer does not have (or have…

Winners Remorse

Winners Remorse [Does the M&A Process Lead Buyers to Overpay?]

Winners remorse: does paying more for a business than anyone else mean you have overpaid?  Not necessarily. When managing a company divestiture, there comes a point when interested parties are requested to provide non-binding expressions of interest (called an EOI, this is the first indication of value based on reviewing the CIM and answering select questions,…

working capital adjustment

Working Capital Adjustments in an Acquisition

Determination of working capital is always a point of negotiation in a Share Purchase Agreement.  This is different from an asset purchase where the cash held in the business would not be an issue.  However, it should be noted that you can still purchase a going concern business by way of an asset purchase. Simply…

Minimize Tax

Shares Versus Assets: It is About Minimizing Net Taxes

How do you minimize taxes payable in a business sale?  Company acquisitions can be in the form of a share purchase or an asset purchase.  Both can accommodate the full transfer of a going concern business.  The fundamental difference is that in a share sale, the shareholders sell their shares and receive the proceeds personally…

Constellation Software Inc., The Descartes Systems Group Inc., Enghouse Systems Limited, and Open Text Corporation

Four Companies That Know How to Acquire

There have been numerous studies on the difficulties of successfully completing acquisitions.  Some studies suggest that the majority of all acquisitions fail.  We won’t debate what is a success or failure, and over what time frame it should be measured here but what we will do is review four leading Canadian software companies and examine their…