The process of selling a company can be complicated and requires a lot of time and effort. Having a defined process and timeline in place is critical to ensure a successful transaction. Colonnade brings a process-oriented approach to each deal to help each of our clients navigate this challenge.
The key milestones in the sales process are outlined in the graphic below.
Colonnade’s timeline for a typical sale transaction consists of four phases: Pre-Marketing, Go To Market, Management Presentations / Buyer Diligence, and Exclusivity / Documentation and generally lasts around 16 weeks.
Phase One: The first phase is the pre-marketing phase. Colonnade, as a sell-side advisor, performs an in-depth analysis of the company to ensure a complete understanding of the business and addresses any potential issues. Phase one prepares the company to be in an optimal position to go-to-market.
Phases Two through Four are the “In the Market” segment, in which we’re interacting with buyers or investors on your behalf and working our way expeditiously through investor calls, due diligence and documentation.
Phase Two: Go-to-market, where Colonnade begins formally contacting potential investors or buyers of the company. Colonnade may contact up to 100+ potential investors or buyers, all of which have been approved by the client, depending on the situation and the objectives of the seller. Colonnade uses the information gathered in phase one to answer the majority of the questions asked during this phase, letting the company’s management team focus on running the business.
Once interested parties have an NDA in place, we share the confidential information memorandum, a compilation of the history of the company, an overview of the team, the industry outlook, and the growth prospects. Colonnade solicits a written indication of interest to determine which investors or buyers are interested and ready to commit.
Phase Three: Management Presentations / Buyer Due diligence. This phase begins with the company’s management team meeting with a limited group of qualified potential investors or buyers. This is an opportunity for the management team to get to know the interested parties, too; both sides ultimately need to be comfortable working with each other going forward. During this phase, Colonnade opens a secure electronic data room for the interested parties to review materials. At the end of phase three, Colonnade asks for this select group to submit final written bids, often accompanied by a markup to the draft purchase agreement.
Phase Four: Exclusivity / Documentation. After reviewing the final bids, the company, with Colonnade’s guidance, selects the winner. Once the investor or buyer is selected, they conduct final due diligence. Attorneys work to negotiate the purchase and employment agreements. If applicable, a reps and warranties insurance policy is put in place after final diligence is complete.
A typical transaction takes around 16 weeks but can vary, as each transaction is unique.
For more information on the M&A process and timeline, listen to Colonnade’s podcast: Middle Market M&A, episode 001: Pre-Marketing: The First of the Four Phases of Selling Your Company and Episode 002: In the Market: The Next Three Phases of Selling Your Company
If you would like to discuss the M&A process and timeline with Colonnade, contact:
Director of Business Development