How Long Does M&A Take?

August 27, 2018by Nate Nead0

If done correctly, selling your business can take a year or more and requires a steady, but controlled hand in guiding the process from start to finish. Sellers often wonder, “why does the process take so long?” Let’s reverse engineer it to show why this is the case.

Deal Prep–While a good hustle can shorten this process, it typically takes six to eight weeks of grunt labor. It includes gather preliminary due diligence data, preparing the deck with all of its associated details as well as compiling the strategic and financial investor lists.

Two Months to be safe.

Deal Marketing–This process can take four to six months, especially if you want to get the proper attention of some of the largest players in a given niche. It involves thousands of phone calls by your investment banker or M&A advisor.

Four months to be conservative.

Management Meetings–Management meetings with potential buyers and working from IOIs to LOIs can take four to eight weeks. This time often involves answering large numbers of questions from would-be buyers and getting them comfortable with a valuation that makes sense.

Two months is a good gauge.

We are now in the process eight months and we have even started to discuss due diligence which can take 90 to 120 days.

That gets you to your year, but many of the best processes take even longer.

How to speed things up?

You can certainly shorten things, if need be, but the length of teim is generally given to deals that have the greatest potential for deal maximization in a sell-side auction. Attempting to truncate typically means not giving all the potential would-be suitors the ability and opportunity to vet and express interest in the deal. In other words, it means selling short.

We have seen sell-side M&A deals go as fast as five months and as long as several years. Many factors are at play, but a good gauge is 9 to 18 months.

Nate Nead

Nate Nead is a licensed investment banker with Four Points Capital Partners, LLC and Principal at Nead, LLC. Nate works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. Four Points Capital Partners, LLC is a member of FINRA and SIPC and registered with the SEC. Nate resides in Seattle, Washington.

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