Business Sale Process

Business 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 options. The right buyer is the one that benefits the most from the purchase.

Finding the Right Buyer

Terminology and Documentation

Terminology and Documentation

Before proceeding down the M&A path, here you can familiarize yourself with the terminology and typical documentation used in the process.

Terminology and Documentation

The Purchase and Sale Agreement

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 divestiture transaction.  Other documents typically include employment agreements, escrow agreements, non-competition agreements, releases, and more…

How Long Does it Take to Sell a Company?

How long does it take to sell a company?  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, while iterative with the seller, can be completed within four weeks.

Preparation of the due diligence materials is highly company dependent and can take from several weeks to several months.

Engaging potential buyers and securing expressions of interest Potentially to many parties; up to 2 months
Management meetings and supplemental information provisioning; securing and negotiating the final LOI. With the top 3 to 5 parties; up to 2 months.
Due Diligence and drafting/negotiating the purchase and sale agreement. With the final party; 45 to 60 days.
Total 7 to 9 months

 

Having said that, the following is an actual example of a divestiture of a private company…

Business Broker or M&A Advisor – What Do They Do?

What is the difference between a business broker and an M&A Advisor?  The main difference is in the size of transactions they work on.  Business brokers deal with smaller businesses, retailers, restaurants, franchisees while the term M&A Advisor is more associated with investment banking firms who work on more complex and larger transactions. In “How…

When is a Management Buy-Out (MBO) a Good Idea?

MBO stands for Management Buy-Out and is a form of acquisition where a company’s existing managers acquire a large part or all of the company from either the parent company or from the private owners. An MBO is one alternative for an owner-entrepreneur to exit his or her business.  The management team buying the business can range from an experienced arm’s length team to family members who are active in the business.  The advantages of an MBO include…