After executing an agreement to work with the representative firm here is the ballpark timing estimate for Selling a Company:
- The consultant will supply a list of financial data necessary to properly present the company’s historical, current, and future expectations. While this sounds very basic it really is an opportunity increase the ultimate price of the business, so merger and acquisition experience is ultra important. There will also be a list and conversations that will allow the presentation to provide an understanding of the company’s focus, method of operation, and makeup. This information is often time consuming to assemble however, it is critical to the ability to attract the proper acquirers who should make very competitive offers. The process really does not begin until this information is provided and the time required to assemble varies from days to weeks.
- The consultant uses the information from the prior paragraph and assembles a memorandum presenting in a clear and encouraging format, which is based on their experience in selling similar businesses. This should be completed within a week to ten days.
- The consultant approaches potential buyers based on the authorization of the seller. This starts with an initial thumbnail summary that is intended to remain anonymous and an initial conversation to understand the reason for the interest is followed by a Confidentiality Agreement (also known as a Non-Disclosure Agreement). After answering questions and supplying additional insight to the investment opportunity the non-binding valuations are presented. This phase should take 30-45 days.
- The consultant and stockholders decide which valuations are attractive and appear to be a likely candidate. Conference calls between these suitors, the stockholders, and the consultant are made to present the company in more detail and to learn more of the suitors. This should be completed within 2 weeks.
- Of those suitors who remain in the process are invited to tour the facilities. The interview goes both ways. Depending on schedules and the number of dates required this could take several weeks.
- The consultant then discusses with the potential buyers their interest in proceeding, which is a Letter of Intent. Once the stockholders review these offers and the consultant negotiates to enhance the preferred proposals then one is selected. This could take from one to several weeks.
- The due diligence process begins which is an extremely detail assemblage of information, visits from the buyer’s representatives and lenders, and the legal document negotiation and assemblage. This could take two+ months.
Of course, every transaction is unique so this is only an educated guess. We at The Montana Group advise that six months is a good target and we strive for as expeditious as possible.
“Selling a business is a once-in-a-lifetime and lifestyle change that often affects multiple generations. So, use a specialist with years of experience. While this can be done by the business owner in an attempt to be frugal, our 25 years of this specific focus tells us that often the owner is reducing the sale price in multiples over the money saved from not paying a consulting fee.”, says Emmett Barnes, President and Founder of The Montana Group.
