Selling a business – Part I:
The timeline selling a business and the criteria to achieve best results influence your decision to sell your company or parts of it.
Selling your company is often an emotionally charged once in a lifetime decision. You will benefit from having a professional alongside you that manages the process and does the work leaving emotions aside.
The process includes a few important steps, which should be followed to optimise chances for a successful transaction, meeting objectives such as to:
- Maximize value for the seller
- Meet strategic restrictions
- Maintain business value
- Keep process under control
- Do not overburden management
- Do not disrupt operations
- Maintain employment
- Retain key persons
Professional support helps defining realistic terms and adds necessary resources to your management, accountants, tax professionals and lawyers to master the process. Such support is typically provided by investment banks, M&A advisers and business brokers. They can help you preparing the company for sale, understanding the effective value of the business or its assets, highlight the most valuable aspects, access buyers, generate parallel competition, flexibly design an adequate transaction structure and minimize operative disruptions and delays anticipating due diligence and valuation issues. Bringing resources, rigor and professional expertise to the process doesn’t come free, and, as usual, you will get what you pay for. The final sale result depends on how the whole process is managed.
Once you mandate an M&A adviser, you will generally have a few intensive months before executing the transaction.
Timeline selling a business:
- Preparing the business for sale – can be very swift, if the business is transparently structured and documented or take quite long if it isn’t.
- Marketing the business – might take a few weeks, depending also on the strategy and the availability of buyers.
- Selecting indications of interest and following up with data and meetings – might take some weeks, depending from the quality of information and availability of buyers.
- Generating competition through such as a structured auction to receive binding bids and drafting the transaction structure – can be very swift, once buyers have been satisfactorily informed.
- Mastering due diligence, final negotiation and closing – might take weeks to months, depending from its complexity and data quality.
Delays to the expected timeline selling a business are relative to the chosen setup, if days become weeks, weeks can become months. Hiccups lurk at each step, especially if the initial preparation is not accurate. We will have a look at them separately. Of course, some shortcuts can make sense in certain cases, but the principles should apply to most cases, including to the selling of major properties.