What happens in an M&A transaction

The stages, in order

Preparation. Financials cleaned and ideally audited, contracts assembled, an information memorandum written, a data room built, and the equity story agreed. Done properly this takes two to six months and it is the stage most often rushed.

Approach. A buyer list is built and contacted, usually under a non-disclosure agreement, sometimes anonymously at first through a blind teaser.

Indicative offers. Interested parties submit non-binding proposals — a price range, a structure, conditions, and their timetable. These are expressions of intent, not commitments.

Selection and exclusivity. One buyer is chosen and a letter of intent or heads of terms is signed, usually granting exclusivity for a defined period. This is the pivotal moment in the whole process.

Due diligence. The buyer investigates in depth — financial, legal, tax, commercial, operational. Typically six to twelve weeks. Covered in what buyers actually examine.

Documentation. The sale and purchase agreement is negotiated alongside disclosure schedules and any ancillary agreements.

Conditions and completion. Regulatory approvals, third-party consents and any other conditions precedent are satisfied, then completion occurs and consideration is paid.

Why exclusivity is the moment that matters

Until exclusivity is granted, a seller has competitive tension: several parties, any of whom might be chosen. The moment exclusivity is signed, that tension is gone, and it does not come back.

From that point the buyer has months to investigate while the seller has no alternative to fall back on. If the buyer finds something — or decides to reinterpret something — and proposes a lower price, the seller's realistic options are to accept, or to restart a process that will now take another six months and will be asked why the previous deal failed.

This is why exclusivity terms deserve far more attention than they usually get. A shorter period, a clear list of what has already been disclosed, and defined circumstances in which price may be revisited are all negotiable before signing and impossible afterwards.

The documents, and what each one does

An NDA protects information and is routine, though its restrictions on approaching staff and customers are worth reading.

An information memorandum is the seller's case: what the business does, how it earns, why it will keep earning. It should be accurate rather than promotional, because everything in it will be tested.

A letter of intent or heads of terms sets out price, structure, conditions and exclusivity. Mostly non-binding on price — but the exclusivity and confidentiality provisions usually do bind, which surprises people.

The sale and purchase agreement is the contract: what is being sold, for how much, paid when, with what warranties and indemnities.

The disclosure letter is the seller's protection. It qualifies the warranties by disclosing what is actually true, and a properly prepared disclosure letter is one of the more effective defences a seller has against a later claim.

Who is in the room

On the sell side: the owner, a corporate finance adviser running the process and managing the buyer field, lawyers drafting and negotiating, and accountants or tax advisers on structuring.

On the buy side: the acquirer's deal team, their own advisers, and often lenders or investors whose approval the buyer needs — which is a common and under-appreciated source of delay.

The adviser's least visible function is usually the most valuable: keeping the owner out of direct confrontation with the buyer. Transactions involve genuinely adversarial moments, and a business that must continue trading afterwards — frequently alongside the same people — benefits from having those moments handled at one remove.

How long it takes

Preparation two to six months, approach and indicative offers one to three, diligence one and a half to three, documentation one to two, and conditions to completion anywhere from a fortnight to six months depending on what approvals are required. Realistically, six to twelve months end to end.

Sellers consistently underestimate this, and the underestimate is expensive. A business that begins a process with limited cash runway ends up negotiating from a position everybody in the room can see. The single most useful preparation is to start while the business still has the option of walking away.

Confidentiality, and who finds out when

Every seller worries about staff, customers and competitors learning of a sale prematurely, and the worry is justified — leaks cause customers to hedge, staff to leave and competitors to attack precisely when the business must perform.

Processes are designed around this. Approaches begin with a blind teaser identifying the business only by sector and size. NDAs precede any detail. Information is staged, with the sensitive material — customer names, pricing, key contracts — released late and sometimes only to a shortlist. Site visits are arranged out of hours or framed as something else.

Internally, most owners bring in a very small circle: the finance lead, perhaps one other. Wider communication is usually reserved until terms are agreed and the deal is likely to close, at which point the message is delivered deliberately rather than discovered.

One genuine tension is worth naming. Key staff frequently need to meet the buyer before completion, because the buyer is partly acquiring them. Managing that moment — late, prepared, and with the retention conversation ready — is one of the more delicate pieces of process design in any transaction.

Where deals actually fall apart

Rarely on price at the outset. Usually on what emerges later.

Diligence findings — undisclosed liabilities, tax exposures, customer contracts that turn out to be terminable at will, employment issues. Trading deterioration during the process, which is common precisely because the owner is distracted by the transaction. Financing failure on the buyer's side. Warranty negotiations that expose how differently the parties see risk. And fatigue, which is real: processes take months, and both sides make worse decisions in month nine than in month two.

Most of these are reduced by preparation rather than negotiation. A seller who has already found their own problems, documented them and formed a view on each is negotiating from a different position than one discovering them alongside the buyer.