Helping you prosper
“How long should a company sale take?” is commonly one of the first questions asked of a corporate finance adviser by a potential client.
The answer is usually… it depends.
What does it depend on?
It depends on the stage of the process you’re in, on the complexities of the transaction, and on the personalities of the people involved.
The first stage of selling a company is finding a buyer. This can be the most unpredictable part of the entire process and could take anywhere from a few weeks to several years. Every business sale is different, and identifying the right buyer (someone who sees the value in the business and is prepared to proceed) takes time.
Once a buyer is found, the next stages of the transaction tend to follow a well-trodden path, so the timeframes can be a little more predictable.
A real example from a recent transaction
Let me share the story of a deal where we were acting for the buyer of a company.
Our client approached us with a heads of terms document that had already been prepared. They explained that they had taken the deal as far as they could on their own, and now needed help from experienced advisers to see it over the line.
They engaged with our corporate finance team, along with a law firm who we had good experience working with previously.
There were still a number of issues within the heads of terms which were not agreed by our client and some issues not addressed at all by the heads of terms.
So, an all-parties meeting was set up to 'hammer out' the deal.
Following a four-hour long meeting, just about all of the outstanding issues had finally been resolved. At that point, the seller made a surprising announcement:
“OK, now that’s done I’d like this all concluded by Monday."
Five days to complete the deal!
When speed creates risk
Unsurprisingly, there was some disagreement in the room about whether completing the transaction within five days (including a weekend) was realistic. A phrase was uttered which has stuck with me as a useful prompt when faced with these situations:
“Act in haste, repent at leisure”.
The deal was concluded within ten days. However, crucially, it included an error in the seller-drafted sale agreement, which related to an interest rate applied to the deferred consideration. This cost the seller approximately £320,000 in interest payments over the course of the term.
So how long should selling a company take?
As it turns out, if all the stars align, and you’re not too concerned about doing it well… one week.
But that’s not really the point.
The correct answer is that a company sale should take as long as it needs to do it right. It deserves time and care to ensure that, what may be the biggest transaction in either the buyer or seller’s life, is considered and reflected upon by experience and competent advisers who can then provide sound advice.
At UHY, we value above all else providing sound, competent advice that helps our clients prosper. Sometimes the most valuable advice we can give is to pause, take the appropriate time and consider what is in front of you.
The next step
If you are considering selling your company and would like advice on the company sale process, please get in touch with Keiran Taylor, the author of this blog, or speak to your usual UHY corporate finance adviser.
