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

How long does it take to sell a company

How Long Does a Business Sale Take? (with milestone chart)

How long does it take to sell a business?  Milestones in the business 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, guided by advisor). The documentation including a teaser,…

business due diligence

What is the Due Diligence Process and What Does it Entail?

The due diligence process is an investigation of a business or person prior to signing a contract.  More specific to a business sale, business due diligence is the process of verifying the representations made in the CIM and other marketing materials provided to the potential acquirer by the seller.  For example, in a CIM it…

Comparable Company Analysis

Valuation – Comparable Company Analysis

There are a number of approaches to valuing a business. There are market based approaches such as public company trading multiples and comparable transaction analyses and cashflow and earnings based methodologies such as the Discounted Cashflow (DCF) analysis.  In this post we will review market based approaches. Comparable Transaction Analysis Let’s start with the easier…

working capital adjustment

Working Capital Adjustment in an Acquisition

A working capital adjustment is required when a going concern business is acquired by way of a share purchase agreement.  This is the case for two main reasons: (i) because working capital changes every day as revenues come in and payments are made and (ii), because working capital is easily manipulated in a material way…

Winners Remorse

Buyers Remorse: Does the M&A Process Lead Buyers to Overpay?

Buyers 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,…

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…