HOW LONG WILL MY TRANSACTION TAKE?

Completing my transaction

A common question we hear is “how long does it take to sell a company?”. A worthwhile question indeed, and one that isn’t easy to answer for various reasons, as selling a business is an invariably slow process. On average, however, it generally takes six months and one year to close a deal

For this reason, it is important for sellers to be prepared, from the onset, for a lengthy process.

THE PREPARATION

You will need to go through the preparation phases which can last 6 to 8 weeks minimum. If you are not prepared, it will drastically slow down the process, or even endanger the sale. A whole number of issues can be dealt with rather effectively at a preparation phase but can become more delicate, problematic or even “deal breakers” when one is in the negotiation phase.

A simulation of due diligence can help to ensure that everything is squared-off from a legal, operational, fiscal and commercial point of view.

MARKETING

While difficult to forecast, it generally takes anywhere from 1 to 4 months to market a sale. It is very dependent on current market forces and the economy; For example, a recession will likely push back the time it takes to sale. As buyers eventually make themselves known, the seller’s M&A advisor can discuss the opportunity in general terms and acquire confidentiality agreements to release more specific data on the company.

NEGOTIATIONS AND CLOSING

By the time we reach this stage, it is necessary to determine the price, additional prices and the payment terms and deadlines. There may be several exchanges between buyer and seller before the LOI (Letter of Intent) can be accepted. While it may take only one to two months to close a small business deal, larger business deals typically take up to 3 months to close.

As soon as the letter of intent is accepted, it is necessary to move as quickly as possible towards the signing of the final contract. The due diligence phase makes it possible to ensure that there are no skeletons in the closet or that important points have not been forgotten in the previous stages.

Lawyers then aim to finalise legal aspects, making the agreement more robust to implement contingencies and ensure its compliance with laws and regulations

Conclusion

Instead of giving a specific time to sell a company, it is best to give an idea of what the M&A process involves and how long it typically takes to complete each stage.

Also bear in mind that If your business is ready to sell, it typically takes about a year from preparation to closing. If your business is not ready to sell, there may be additional time involved to get to the point of sale.

Venture Corporate Finance is a middle-market M&A advisory firm for clients planning to sell their businesses, raise capital, restructure, or grow with acquisitions. We provide independent advice and bespoke transaction solutions to meet their specific objectives.

For more information on corporate finance and M&A services, contact Venture Corporate Finance.