When you finally say to yourself, I want to sell my company in the built environment, you may think that things will move quickly. But the reality is that the waiting can be long and is often the hardest part. Normally – the process in its entirety is 10-12 months. However, knowing exactly what happens before, during, and after the sale of your company should provide the needed transparency to help you manage the process. Ensuring that the process is followed and handled professionally will make sure that counting the days was worth it in the end. Here, we help you understand the necessary steps – and the expected timeline attached to each of them – so that you can get a clear understanding as to how long it takes to sell your company.
First things first. Before you jump into the deep and run the risk of amping up the expectations, you may want to ensure that you are ready to sell in the first place. Has your company been showing sustainable growth, year-on-year? Are your margins raising eyebrows or just red flags? Are you delivering a positive EBITDA/Profit?
The Timeline to Triumph
While there is some flexibility around the exact duration of each element required to make the sale of your company a success, the process that will take you there is very defined. Normally – the process in its entirety is 10-12 months. Here is the step by step:
- Initially, after the Engagement Agreement with Stonemill is signed, there is a valuation period before any company goes on the market for sale. This period requires the vetting of financials to get an accurate picture of what the company is worth. Once the valuation is discussed and agreed upon, the confidential information memorandum can begin to be prepared. After the confidential information memorandum is prepared and finalized, then your company is ready to go to market. Expect this stage to take up to 1 month.
- Once your listing is live, it’s showtime. We do our homework on who would make the perfect fit before we scour the network to align your positioning and performance with a buyer’s long-term goals. During this stage, there will be video calls and in-person meetings with potential buyers to assess the fit. We give this stage a solid 6 months to generate enough leads in order to begin issuing a first LOI.
- Once there is a genuine offer made by a buyer, expect a further 1 month to review, analyze and negotiate a final LOI.
- Finally, turning a serious buyer’s intention into a closed deal will take…well, it will take the time it takes, really. The due diligence timeline is correlated with a buyer’s thoroughness and a seller’s previous processes. As a benchmark, we attach an expected duration of 90 days – but that can move in either direction. Expect to be able to improve on this timeline with more sophisticated buyers that have gone through this before. In addition, the required paperwork to close a deal will be produced during this 90-day window, which takes into account a small buffer for the required back and forth.
Depending not just on the experience but the type of buyer, the pace of the process can move in either direction as well. Strategic buyers with an eye for an operational fit will typically move faster. Financial buyers will put their targets through a Quality of Earnings report (think of this like a mini audit), which can add another 3-5 weeks to the process. Beyond getting the alignment right, which is something out of a seller’s hands, a seller can help shorten the timeline as well. If a buyer and seller remain in agreement with the initial closing docs, and if a seller is well-organized and on top of his operations and financials during the due diligence process, this will help drive up confidence and drive down duration.