Business sale process explained | CapEQ

Understanding the Business Sale Process: Your Ultimate Guide

Steve Murphy

Steve Murphy


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Understanding the Business Sale Process: Your Ultimate Guide

You’ve made the decision to embark on the journey of selling your business. But what does the business sale process actually look like, and what can you anticipate along the way? In this insightful guide, we provide a high-level overview of the three key phases that characterise almost every successful business sale.

Phase 1: Preparation

The initial phase involves a formal meeting between you (the client) and the consultancy (CapEQ) to establish a project brief. Together, you’ll determine the most suitable selling approaches based on your desired outcomes. This could involve a Wide Auction, targeting a large pool of potential buyers to drive up competition, or a Targeted Auction, focusing on a select group for increased confidentiality.

A strategic plan and schedule are then created, outlining the roles of the project team and leaders. The team gathers essential data on your business, potential buyers, and the market, taking approximately 6-8 weeks.

Phase 2: Active Marketing

The active marketing phase, lasting at least two months (and longer for complex or international projects), involves extensive research and refinement. A Virtual Data Room is established to hold all necessary information about your business, released strategically to encourage optimized offers.
Proactive contact with potential buyers includes customised emails, telephone calls, marketing brochures, and direct conversations, all aimed at protecting your identity until discussions evolve. Information Memorandums, protected by NDAs, are issued when discussions turn into realistic propositions.

Phase 3: Negotiation, Due Diligence, and Completion

In the final stage, one or more suitors conduct a thorough analysis of your business based on provided information and their independent research. If multiple offers arise, they are ranked against the agreed criteria, leading to the issuance of a Letter of Intent. Final due diligence is conducted, and, ideally, a mutually beneficial deal is completed.

Real Deal: A Case in Point

An illustrative example involves a client with a £12m turnover and a £3.1m EBITDA valuation. Researching 162 potentially interested parties across the EU and USA, CapEQ made 842 phone calls, leading to 350+ exploratory conversations. The process culminated in eight unique offers, with the third-highest offer being chosen due to its alignment with the future of the business and its people.

A 10-week due diligence process led by CapEQ resulted in a successful deal, showcasing the importance of considerations beyond financials, such as beneficial earnout periods and wider stakeholder advantages.

Beware of Fixed Processes

While the example provides a glimpse into a transaction, every sales process is unique. Treating the process as a tool rather than a straitjacket is crucial. Flexibility is necessary to navigate inevitable blockages, setbacks, detours, and delays. A combination of a rigorous process, adaptability, and an experienced guide is key to achieving the right outcome.

The Road Ahead

By setting clear destinations and desired outcomes, positive progress can be maintained every step of the way. Rigorous processes, adaptability, and experienced guidance ensure transparency, clarity, and the achievement of the right business sale outcome.


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