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M&A – Criteria and timeline

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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:
  1. 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.
  2. Mar­ket­ing the busi­ness – might take a few weeks, depend­ing also on the strategy and the avail­ab­il­ity of buy­ers.
  3. 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.
  4. 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.
  5. 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.
Arranger helps you to => get Attention => create Attraction => pass Analysis => execute Agreements
More thoughts about how to sell a com­pany will fol­low. If you have ques­tions, con­sult us, we’ll be glad to help.