How long does it take to sell a business, and what does a typical timetable look like?
Typically, the overall time required to sell a business is between 9-12 months. As you might expect, this can vary depending on the business being sold or the type of transaction.
At BCMS, each sale process we run will be tailored to meet the specific need of the client, and therefore may vary from the illustration below. However, as a guide, you could consider the process as segmented into three stages, each of which lasts approximately three months:
Stage 1: Preparation
This stage is crucial and involves a thorough review of your business, from a legal, financial and commercial perspective. It also involves market research of your competitors and analysis of your position within your core markets, as well as profiling and identifying potential buyers. In this stage, you will need to develop a robust financial forecast based on historic Key Performance Indicators (KPIs) and known new opportunities. A Virtual Data Room is also prepared in readiness for Due Diligence. One output of this phase is a detailed Information Memorandum (IM), which you can think of as being the Sales Prospectus for your business. It provides detail on all aspects of your business – e.g. operational, commercial, financial – and will also include a section of what the future growth opportunities are for the business.
Stage 2: Go to Market
Creating competitive tension is critical to successful negotiation, and this stage includes contacting potential acquirers and building a market for your business. We do not approach any buyer unless you have confirmed you are happy for us to do so. Upon signing of a Non-Disclosure Agreement (NDA) to ensure confidentiality, interested buyers/investors are provided with your IM. After that, Initial Offers are invited, terms discussed, commercial synergies explored, and additional information exchanged. Following this, selected buyers are asked to submit a Final Offer. Following agreeing and signing Heads of Terms with your preferred buyer, there will be an Exclusivity period.
Stage 3: Contract negotiation
Once we have the commercial terms agreed in principle, the buyer will take the next month or so to conduct its Due Diligence (DD). This is a detailed review of all key aspects of your business and its operations. Typically covering commercial, legal, financial and tax matters, its purpose for the preferred buyer is to verify its valuation and assess future risk. Once DD is complete, the focus moves for all parties to finalising the Share Purchase Agreement (SPA) and any ancillary legal documentation such as Service Contracts.
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View recent BCMS transactions