Why the timeline is lengthening to find and buy small and midsize businesses.

You may have seen statistics that say searchers are taking (wasting?) more time to find worthwhile opportunities. That’s true for most searchers. It may not be true for people who learn how to prepare themselves and then find the right businesses to buy.

And, while we’re thinking about timelines think about this:

• Beware of statistics reporting the median. Pay more attention to what’s happening throughout the distribution curve. Some kinds of companies are selling more quickly than others. Some searchers are taking much longer than others to find and make deals. Buyer competition helps or hinders, depending upon whether you’re selling or buying.
• Irrationally deferring completing an M&A transaction presents at least two kinds of (avoidable) potential losses. (1) Missing out on buying the best opportunity that you’re going to find. (2) Lost income opportunity, which is what you would have earned every month longer it takes to complete your deal.

Let’s consider what to do about timelines.

First, the big picture: Some systemic factors, such as industry, location, market conditions, and the quality of companies/sellers and searchers/buyers, affect timing and dealmaking. If you’re reading the dealmaking news, you’ve seen reports suggesting that it is becoming more difficult for buyers to find suitable businesses to acquire, particularly in certain industries or regions where buyer demand is high and seller supply is low.

There are other factors that can impact the timeline for finding and buying small and midsize businesses. Click the links in this article for more insights; plus, you’ll see tips to increase your searching prowess. You’ll also glean ideas for your pre-LOI due diligence. (More on that coming up.)

Unfamiliarity with best practices for searching/buying/offering/selling: The unfortunate reality is the multitude of people operating from unreliable anecdotal information shared by ill-informed people who are unsuccessfully trying to sell and buy businesses. DIYers risk the most, and they lose the most opportunities.

Market research and analysis: Market research and analysis can impact the timeline of the acquisition process. Buyers may need to conduct extensive market research and analysis to determine whether the target business is a good fit for their strategy and to develop a plan for growing the business post-acquisition.

Confidentiality: Most sellers want to keep confidential the fact that their business is for sale. This can limit the pool of potential buyers and require extra precautions to ensure confidentiality, which can add time to the acquisition process. But, what about the confidentially of searchers? Maybe they can’t risk their boss discovering their search. Or having their financial statement going who-knows-where. What about disgruntled sellers or brokers telling their business peers that the searcher is unworthy? This is why the savviest buyers and sellers use mutual nondisclosure agreements.

Third-party approvals: Third-party approvals can impact the timeline of the acquisition process. For example, if the acquisition involves a large or a public company, the transaction may need to be approved by shareholders or regulatory agencies, which can extend the timeline. Private company transactions by private parties can be helped or stymied by their spouses, partners, investors, and lots of other “personal” issues.

Financing: The availability of financing can also impact the timeline of small and midsize business acquisitions. If buyers need to secure financing, it can take (lots of) time to identify lenders, submit applications, and secure funding.

Legal and regulatory requirements: Look for legal and regulatory requirements that need to be met before a sale can be completed, such as obtaining licenses, permits, or certifications. These requirements can vary by industry and location and may add to the overall timeline of the acquisition process.

?Cultural fit:, Buyers are wise to invest time building relationships with the owners of businesses (and the company’s employees) to determine if there is a cultural fit . This can involve multiple meetings and discussions before a deal is even proposed, which can extend the timeline of the acquisition process.

Complexity of the transaction: If the transaction involves a complex business structure, multiple stakeholders, or a large number of assets, it can take longer to find and then negotiate and complete the deal.

Valuation: Determining the value of a business can be a complex process that involves analyzing financial statements, market conditions, and future growth potential. If there is disagreement about the value of a business, negotiations can take longer, and the acquisition timeline can be extended. Anatomy of a dumb deal – by business buyers .

Seller and buyer motivations: Their motivations can impact the timeline of the acquisition process. If the seller is highly motivated to sell quickly, the acquisition process may move faster. On the other hand, if the seller is not in a hurry to sell, negotiations may take longer, and the acquisition process may be delayed. Buyers, of course, are often ruled by their motivations. My view is the party most motivated is most likely to acquiesce to the other side of their dealmaking table. This is where you need to dance without stepping on anyone’s toes.

Geographic location: The location of the business can also impact the timeline of the acquisition process. If the business is located in a remote or difficult-to-access area, it may take longer for buyers to conduct due diligence and finalize the acquisition. Additionally, cross-border acquisitions can involve additional complexities and may take longer to complete due to regulatory and legal requirements.

Company size and complexity: The size and complexity of the target company can also impact the acquisition timeline. Larger and more complex businesses may require additional due diligence and negotiations, which can extend the acquisition process. Additionally, larger companies may require more extensive regulatory and legal approvals, which can also impact the timeline. Poorly prepared buyers and sellers repel each other when they, upfront, ineffectively explain what it’s going to take to proceed through the motions of evaluating each other, and the processes for mutual data gathering, and analysis.

Buyer and seller compatibility: The compatibility between the buyer and seller can also impact the acquisition timeline. If the parties have different goals or there is a lack of trust or communication, negotiations may take longer, and the acquisition process may be delayed. (Likeability is a crucial influencer.)

Business reputation: The reputation of the target business can impact the acquisition process. If the business has a poor reputation or a history of legal or regulatory issues, it may take longer to find a buyer or secure necessary approvals. On the other hand, a business with a strong reputation may attract more buyers and move through the acquisition process more quickly.

Industry trends: Industry trends can impact the timeline of finding and buying small and midsize businesses. For example, if a particular industry is experiencing a downturn, it may take longer to find a buyer or secure financing. Conversely, if an industry is experiencing rapid growth, it may be more competitive to acquire businesses, and the acquisition process may take longer. What about A.I.? Is the need for it encroaching upon what you want to sell or buy?

Due diligence process: The due diligence process impacts the timeline of the acquisition process. If the buyer needs to conduct extensive due diligence, it may take longer to complete the acquisition. However, a thorough due diligence process can help identify potential issues and mitigate risks associated with the acquisition. Buyers and sellers may not get to formal due diligence unless they satisfactorily handle pre-LOI due diligence ; this is where deals are fertilized (or aborted).

Financing structure: The financing structure of the acquisition can also impact the timeline. If the buyer needs to secure multiple sources of financing or involve third-party investors, it may take longer to finalize the acquisition.

Negotiation process: The negotiation process can impact the timeline of the acquisition. If the parties have different expectations or goals, negotiations may take longer, and the acquisition process may be delayed.

Tax and accounting considerations: Tax and accounting considerations can impact the timeline of the acquisition process. Buyers may need to conduct extensive tax and accounting due diligence to ensure that the business is financially sound and that there are no hidden liabilities or tax issues that could affect the transaction. Smart sellers do it before offering their company for sale. ?67 Accounting Risks for Business Buyers

Availability of key personnel: The availability of key personnel can impact the acquisition process. If the target business relies heavily on key personnel, the buyer may need to negotiate employment contracts or retention bonuses to ensure that these personnel remain with the business post-acquisition. Evolving Relationships: Why Employees Are The Biggest Risk For Business Owners, Sellers, Buyers .

Integration planning: Integration planning can impact the timeline of the acquisition process. Buyers may need to develop a detailed integration plan to ensure that the acquisition is successful and that the business can operate effectively post-acquisition. (You’ve probably heard that most M&A integrations don’t work as well as hoped; “hoped” being the keyword.)

Tips

• Every acquisition is unique. Buyers and sellers benefit when they’re prepared, flexible, and adapt to changes in their offerings, searches and dealmaking tactics. Having the right advisors and deploying them at the right times can spell the difference between joy and regret. That’s how to ensure done deals. Isn’t it?
• If you don’t control your timeline, it will control you!

Whew! Let’s pause here. Zoom with me to improve your opportunity. Maybe a second opinion can make all the difference for you?

I am the Original Business Buyer Advocate ?, and I can improve your marketability to business sellers, brokers, investors, and others. And then show you how to find and buy the right businesses the right ways.

Email me from my website, https://partneroncall.com/ . Or, DM me on LinkedIn.

Why me?

For decades, worldwide, I’ve evaluated, trained coached and advised searchers and buyers on the basis of hundreds of done deals. My colleagues have shared information about thousands of searchers and dealmakers.

• We have no businesses to sell or recommend.
• No conflict of interest.
• Our loyalty is solely to buyers looking for opportunities leading to done deals.

Not sure?

Watch this:

2-Minute Video Reveals What The Savviest Searchers Do

Read this:

How to Prepare Yourself and Find the Right Business to Buy

Preview my books:

120 Financial Lifelines for Small Businesses

How to Prepare Yourself and Find the Right Business to Buy

How to Buy the Right Business the Right Way—Dos, Don’ts & Profit Strategies

21st Century Entrepreneur Ideas for Kids and Aspirational Adults (Complimentary)

How to Get ALL the Money You Want For Your Business Without Stealing It (USA and Canadian versions.)

Ted J. Leverette

The Original Business Buyer Advocate ?

“Partner” On-Call Network, LLC

https://partneroncall.com/

Each Office Independently Owned & Operated

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