M&A Deal Process and Timeline

What Actually Happens When You Sell Your Company

Five phases, one disciplined process. A clear-eyed walkthrough of the M&A sale timeline, from preparation to closing, for owners who want to know what they're signing up for before they sign up.

Five phases

Preparation → Marketing → Interim Bids → Due Diligence & Final Bids → Negotiation & Closing. Every well-run sale moves through all five.

6–8 weeks of preparation

the longest single phase happens before a single buyer is contacted. That's by design.

Roughly 5–8 months

from kickoff to closing, adding up the stated range for each phase.

The controlled auction

competition among parallel bidders, on a level playing field you control, is the mechanism that maximizes value.

Sale-ready metrics

buyers respond best to revenue above $25 million, EBITDA above $2 million, and growth above 5%.

Confidentiality throughout

NDAs gate every document. Your employees, customers, and competitors learn about the process when you decide they should.

Key Players

a. Owners, CEOs, CFOs
b. Investment Bankers
c. Accountants
d. Lawyers
e. Corporate Development
f. Consultants

Key Objectives

a. Maximize Shareholder Value
i. Determine effective positioning
ii. Access key decision makers
iii. Generate competition through controlled auction process
iv. Design optimal transaction structure
b. Achieve Strategic Objectives
c. Maintain Control of Process
i. Use disciplined approach
ii. Maintain a level playing field
iii. Control distribution of information
iv. Move bidders along parallel paths
v. Amend process at any time; maintain flexibility
d. Minimize Management Distractions
e. Minimize Disruption of Operations
i. Front-load due diligence/valuation/informal bidding
ii. Examine merits of pre-emptive offering process
f. Maintain Corporate Values
g. Retain and Incentivize Management
h. Maintain Employees

Phase 1: Prepare the Company for Sale (6 - 8 weeks)

a. Information Gathering
i. Review business, financial and marketing plans & documents
1. Current and planned business strategies
2. Financial and market projections
3. Review and analyze capitalization of the company
ii. Conduct management/employee interviews (on a confidential basis)
iii. Collaborate and refine potential buyer list
b. Position Company For Sale – Ideal Metrics
i. Revenue & EBITDA growth – preferable above 5%
ii. Revenue above $25 mm
iii. EBITDA above $2 mm
iv. Strong management team
v. Margins consistent or better than industry avg.
vi. Limited customer/supplier concentration
vii. Solid balance sheet
viii. Audited financial statements
c. Preliminary Price Validation
i. Market Analysis:
1. Compare financial performance of the company with publically-traded companies, compute & analyze implied valuation based on relevant market valuation multiples as derived from precedent transactions
d. Detailed Price Validation
i. Income Analysis:
1. Review and analyze implied valuation based on historical and projected cash flows of the Company and assumed costs of capital, growth and discount rates
2. Sensitivity Analysis to valuation variables
3. Base, Weak and Strong economic/business performance test
ii. LBO Analysis
e. Preparation of Offering Memorandum
i. Executive Summary
ii. Investment Considerations
iii. Growth Opportunities
iv. Bidding Procedures
v. The Company Overview
vi. Consumer Trends
vii. Competition
viii. Financial Information & Analysis
f. Finalize Buyer List
i. Strategic fit
ii. Presumed level of interest
iii. Financing capabilities
iv. Likely view of value and potential synergies
v. Ability to execute a timely transaction
vi. Confidentiality/competitive issues

Phase 2: Market the Company (4 - 6 Weeks)

a. Initiate Buyer Contact - Confidentiality Agreements
i. Distribute Executive Summary
b. Distribute Investment Overview & Offering Memorandum
i. Gauge buyer interest
ii. Arrange due diligence & management meetings
c. Assemble Data Room Materials
i. Track buyers

Phase 3: Submission of Interim Bids (4 – 6 weeks)

a. Receive written or verbal indications of interest, depending on market response
b. Select “short list”
c. Schedule management meetings
i. Buyer and Seller meet face-to-face
ii. Write Management Presentation
iii. Coach Management & participating employees
d. Analyze initial Due Diligence/Information Requests

Phase 4: Due Diligence and Final Bids (2 – 4 weeks)

a. Distribute letters requesting final bids
i. Establish competitive bidding/auction process
b. Distribution of draft sale agreement
c. Analyze final offers and sale agreements

Phase 5: Final Negotiations and Closing (6 – 8 weeks)

a. Review and evaluate final bids
i. Obtain and ascertain formal interest and valuation parameters
b. Negotiate with final bidders
i. Maintain competitive bidding/auction process
c. Coordinate all due diligence parties (accountants, lawyers)
d. Assist during due diligence process
e. Assist in closing of transaction

The Five Phases of the Sale Process (durations proportional)

Text reproduced from the report as published by Tully & Holland. Photograph: The White House from Washington, DC, Public domain, via Wikimedia Commons.