Proper planning for an exit requires knowledge of the process and an accurate assessment of the time required to complete various tasks that will result in the sale of your business. In an ideal situation, a qualified and highly motivated buyer might approach you with an offer that is immediately acceptable, and then completes due diligence and document drafting in 60 days and moves straight to close. A more likely scenario will be a 6-9 month search for the right buyer, and possibly weeks of negotiations to finally achieve the right deal. Anticipating this will allow you to budget your time and expectations properly.
It is never too early to start preparing for an exit. We coach our clients to begin early in assembling the basic documents that will be required by any buyer, all of which can be maintained and updated as necessary. Obtaining good advice on financial accounting is critical, including not just creating clean and well documented accounting records, but also complying with revenue recognition standards.
Once you have decided to go to market and engaged an intermediary to assist with the task, assume that another 30-45 days will be needed for offering documents to be prepared as well as the creation of a targeted list of buyers. Once on the market and in front of buyers, the objective is to move qualified interested parties forward in a managed process. This includes exchange of financial and other business information leading to conference calls and face to face visits with the buyer. Once an offer is made and accepted, anticipate 60 days or more to close as the buyer must complete due diligence while the definitive agreement and associated schedules are completed and details are negotiated.
All in all, 6-9 months can often pass in the preparation, buyer search and negotiations phases. The process can extend even longer if due diligence discloses irregularities requiring further investigation and response. In an era of economic upheaval, don't expect a buyer to skip over any important due diligence issues. If properly prepared, however, this process can go smoothly and quickly.
As to the question of your preparing for an acquisition, this should be an ongoing and cognizant part of your planning so that when the market or shareholder needs dictate, your company is ready for the process to begin.