Most business owners preparing for a sale spend significant time getting the business ready and relatively little time understanding what the sale process itself actually involves. The two things are related but distinct, and the process has its own rhythms, pressures and decision points that are worth understanding before you are in the middle of them.
Appointing an adviser
Most business sales of meaningful size are run through a process managed by a corporate finance adviser or M&A boutique. Their role is to prepare the sale materials, identify and approach potential buyers, manage the process and help negotiate terms. Choosing the right adviser — one with relevant sector experience and a track record of completing deals at your size — is one of the most consequential decisions in the process.
The information memorandum
The information memorandum, sometimes called the IM is the document that presents your business to potential buyers. It covers the business model, financial history, market position, management team and growth opportunity. It is prepared by your adviser but draws heavily on your management accounts, financial forecasts and your own narrative about the business. The quality of this document shapes first impressions and influences who engages seriously.
Management presentations and indicative offers
Interested buyers will typically want to meet the management team before making an offer. These presentations are an opportunity to bring the IM to life and to demonstrate the quality of the team, the depth of the business and the credibility of the opportunity. Indicative offers follow, and from these your adviser will help you select the buyer or buyers you want to take into exclusivity.
Exclusivity and due diligence
Once a preferred buyer is selected, you enter exclusivity which is an agreed period during which you negotiate only with that buyer. Due diligence happens in parallel: the buyer's team examines your financials, contracts, people and operations in detail. This is the most intensive phase of the process and typically the one where businesses that have prepared well are separated from those that have not.
Heads of terms, legal documentation and completion
Heads of terms set out the key commercial terms of the deal — price, structure, conditions, timeline. Legal documentation translates these into binding agreements. Completion is the transfer of ownership. Between heads of terms and completion, adjustments to price based on working capital and net debt are calculated and agreed. This is why understanding these mechanisms before you enter a process matters.
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