How Long Should an M&A Deal Take?
Though no two M&A deals have precisely the same timeline, it is possible to provide a reasonably accurate estimate of the length of time necessary for a deal to close based on a few factors. Whether you are looking to buy or merge with another business or are a business owner interested in selling your company, you have every right to know how long the process will take. Quantive’s services for entrepreneurs looking to sell their business provide exactly that. Our sell-side M&A advisory team is here to help you plan a strategic exit.
An Inside Look at the M&A Timeline
Market estimates for a merger or acquisition timeframe are generally between six months to a year for the sell-side, but the buy-side process can take longer—think a few years. Though a merger or acquisition might only take a couple of months for the relevant parties to sign the dotted line, the distinctive factors of your business and the other business involved in the transaction ultimately shape the timeline. Our sell-side M&A advisory service will provide you with an estimate for completion that is likely to prove accurate even if unexpected hurdles arise that extend the timeline for completion beyond the initial estimate.
The M&A Process is Nothing to Fear
Though the prospect of merging or acquiring can be a bit daunting, there is no reason to be intimidated by it. The measure of an effective M&A team is their ability to streamline the process so you can square your focus on your business and family instead of worrying about the progression of the deal. The M&A process entails a series of steps starting with the planning of the merger or acquisition, transitioning to subsequent research, performing due diligence, the closing process, and the implementation of activities.
The sell-side of a merger or acquisition is initiated with the preparation of the business for sale. Your sell-side M&A advisory team should take the lead in guiding you through this initial stage. The preparation for sale begins with defining the strategy. Even if the acquisition doesn’t come to fruition, it is always in your interest to define your goals concretely, as another takeover candidate might arise. The executives and attorneys should work in tandem to define objectives in the context of a sale to the optimal buyers.
The next step is to gather the necessary materials that present your business in the best light to prospective buyers. A confidential information memorandum and information pertaining to the business’s financials, market position, and value offerings will also be compiled. At this point, the information can be consolidated into marketing materials presented to prospective buyers to add some extra efficiency during the bidding stage.
Bidding and Negotiating
The next step is bidding. Bidding rounds involve the buyer reaching out to the business owner or vice versa to place bids. Review all bids and meet with the bidding parties to learn more about their offers and background before obtaining an official letter of intent. Also known as the LOI, the letter of intent expresses the interest in the acquisition or merger that summarizes the prospective deal.
Next up are negotiations with prospective buyers. Instead of taking the first offer, strategically negotiate with one or several bidders to maximize the value of your business. However, you won’t know the actual value of your enterprise until you receive an official valuation. Our goal here at Quantive is here to determine the actual value of your business, ensuring you sell based on factual and statistical analysis instead of guesswork or gut instinct.
Definitive Agreement and Structuring
Once you negotiate a suitable offer, the next step is to draft the definitive agreement. You and your representatives will meet with the buyer to draft the details of the final deal. At this point, you will enter an exclusivity agreement in which you are locked into the deal with the buyer in question. The only downside to such an agreement is you can no longer pursue additional negotiations with other buyers.
Every business owner should be aware that it will likely take a considerable amount of time to structure the M&A deal. Such agreements are inherently complex as they contain multiple components and moving parts, as every business is dynamic before and also during the M&A process. Everything from securities regulations to taxes, financing, market conditions, and accounting matters can delay the deal. Be patient as both sides work through these issues.
It is in your interest to expedite the due diligence process by promptly providing the buyer with all requested information. These documents range from accounting statements to contracts and beyond. Organize these documents as soon as possible, and you will have done your part to facilitate a timely closing. Be sure to keep the lines of communication open with the buyer throughout the due diligence process so you can proactively address issues and set the stage for a lucrative exit.
The Final Steps
The creation of purchase and sale contracts is necessary after performing due diligence. If the due diligence process does not reveal any stumbling blocks, the stage is set for legal agreements that detail the nuances of the agreement ranging from the asset sale to the exchange of shares of stock. The relevant parties sign these legal agreements, moving the deal that much closer to finalization.
Final signoff from the board is necessary to formally close the deal. Obtain board approval, sign your name to the definitive agreement, and the deal will be finalized. It is at this point that the business integration process commences.
The moral of this story is to be patient as your M&A deal takes shape. Quantive is here to facilitate the progression of the deal with our M&A sell-side advisory, valuation services, and additional guidance throughout the process. Let us spearhead the M&A process on your behalf, and it might take as few as six months to come to fruition. However, even if the process takes several years, the payoff will be worth the wait.
Getting Started with Quantive
Our M&A advisory services expedite the sale or merger of businesses regardless of their size, type, industry, or niche. We will do everything to smoothly move your deal along the M&A timeline. Reach out to Quantive today to learn more about our sell-side M&A services and schedule a consultation.