What is the typical timeline for an exit?
The typical timeline for a full exit can range from 6 – 9 months and can be split into two key stages. The first stage involves the preparation of a marketing document, often referred to as an Information Memorandum (IM), which provides insights into key areas of the business to generate interest. Working with an advisor during this stage can help you to extract, review and order key information into a captivating story that will help maximise interest.
During the second half of the process, the business will typically enter into exclusivity with a prospective buyer, who will then carry out checks to confirm all relevant information. This process is known as due diligence and provides the prospective buyer with a realistic picture of how the business is performing and how it is likely to perform in the future. Due diligence normally covers financial, legal and tax areas but can focus on more specific areas such as IT, commercial or HR depending on the business. The due diligence process normally occurs concurrently with negotiations on the price and terms of the exit, guiding the creation of a share purchase agreement.
The timelines for exits vary significantly, as there are many unknowns in the process, which cannot be predicted. A potential buyer could withdraw from the process during the final stages of negotiations, or a superior offer could be received during due diligence from another prospective buyer. The experience of a corporate finance advisor during these moments is invaluable and will help provide the clarity needed to make the best decisions.