Timeline for Selling a Company – How Long Does It Take?

Timeline for Selling a Company – How Long Does It Take?

Selling a company is a complex process that requires careful planning and execution. It involves several steps from initial preparation to final transaction. Each company is unique, so the exact timeline can vary widely, ranging from a few months to up to two years. Below is an indicative timeline and the steps involved, including an estimate of the time each step typically takes:

Preparation for Sale

Company Analysis and Documentation Preparation (4–8 weeks):

• This phase includes an internal audit, preparation of financial statements, market value analysis, and creation of a “teaser” (containing information about the business model, customer base, financial results, etc.). The time required depends on the size of the company and the availability of data. The process can be faster with prompt communication from the owner or responsible party.

Setting Sale Price and Strategy (2–4 weeks):

• Based on the analysis, the sale price and strategy are determined. It is also important to consider financing options for potential buyers.

Identifying and Approaching Potential Buyers

Finding Prospective Buyers (4–12 weeks):

• This involves identifying and contacting potential buyers, including strategic investors or competitors. This step can be time-consuming, especially in a niche market. If finding buyers is challenging, this phase can take more than six months.

Signing Non-Disclosure Agreement (1–2 weeks):

• Before sharing sensitive information, interested parties usually sign a non-disclosure agreement (NDA).

Negotiations and Offers

Preliminary Offers (2–4 weeks):

• After initial interest, buyers start submitting preliminary offers. These offers can vary in structure and value.

Exclusive Negotiations (4–8 weeks):

• Once a preferred buyer is selected, exclusive negotiations commence. This phase includes detailed discussions of the transaction terms.

Due Diligence

Due Diligence (6–12 weeks):

• This step involves a thorough review of the company by the buyer, covering financial, legal, business, technical, and other aspects. The duration depends on the complexity and scope of the required information. In urgent cases and specific needs, this phase can be expedited.

Contract Preparation and Signing

Contract Preparation (2–4 weeks):

• After due diligence, final contracts are prepared, including the sale and purchase agreement (SPA) and related documents.

Signing Contracts and Completing the Transaction (1–2 weeks):

• After completing legal and financial reviews and contract approvals, the contracts are signed, and the final transaction occurs, including the transfer of shares or assets.

Transaction Closure and Post-Acquisition Integration

Transaction Closure (1–2 weeks):

• This involves the exchange of funds and formal transfer of ownership. It may also involve meeting other conditions.

Post-Acquisition Integration (6–12 months):

• After the sale, there is a phase of integration, which includes aligning processes, staff, culture, and systems between the selling and buying parties. The duration varies depending on the size and complexity of both companies. This phase is only relevant if the buyer is interested in post-acquisition cooperation with the original owner. Often, buyers include this requirement in their transaction conditions, but there are cases where the buyer may separate the original owner from the company as soon as possible, as per the pre-agreed terms.

Overall Timeline

The total duration of the company sale process can range from 6 months to 18 months, depending on the company size, transaction complexity, and market conditions. The search for a potential buyer can be particularly time-consuming. The process can be expedited or extended based on preparation level, legal requirements, due diligence complexity, and the speed of negotiations by all parties involved.

Please consider this timeline as indicative. The exact duration can vary significantly, as companies are made up of people, and some steps may be significantly shorter or longer. In some cases, a company may be sold in 5 months, while in others, it could take up to 2 years