Speed of the deal: why it matters when buying or selling a business

Speed can be a critical factor in corporate finance transactions. In mergers and acquisitions, the old adage that “time kills deals” often proves true. The longer a transaction takes, the greater the risk that circumstances will change.

A well-managed and efficient deal process helps to reduce the impact of market volatility, protects agreed valuations and minimises disruption to the day-to-day running of the business. It can also reduce the risk of losing key employees or customers who may become unsettled by uncertainty.

We recently completed a multi-million pound transaction for a client in just ten days because the buyer needed to draw down funds before a key deadline. While this was unusually fast, it demonstrates what can be achieved when both parties are motivated and properly prepared.

Typically, a business sale will take around three months to complete, although this can vary depending on the complexity of the transaction and how prepared the seller is. Preparing the business properly in advance can make a significant difference and help avoid delays during the due diligence process.

Why timing matters

Sometimes there are specific reasons why a transaction needs to progress quickly. These may include financing deadlines, administrative requirements, retirement plans or personal circumstances.

Speed can also help prevent what is often referred to as “deal fatigue”. As negotiations drag on, enthusiasm can fade and parties may begin to revisit issues that were previously agreed.

A well-paced transaction helps maintain momentum, control costs and preserve confidentiality. It can also allow the buyer to begin integrating the business sooner, enabling them to realise the expected benefits of the deal more quickly.

How to keep a transaction on track

Both buyers and sellers play an important role in ensuring a deal progresses smoothly. Practical steps include:

Be organised and prepare early. Sellers should prepare documentation and data rooms in advance so information can be shared quickly. Buyers should undertake preliminary due diligence early in the process.

Respond promptly to requests for information. Delays in providing documents or answering queries can quickly slow the transaction.

Ensure financing is in place. Buyers should have funding arrangements agreed in principle to avoid last-minute delays or shortfalls.

Use technology and delegate where necessary. Electronic data rooms, digital signing and clear decision-making authority can all help maintain momentum.

The role of your legal advisers

Working proactively with your solicitor can make a significant difference to the pace of a transaction. Your solicitor should be focused on progressing the deal, coordinating with the other advisers involved and ensuring issues are addressed quickly.

Equally important is clear communication between the parties and their advisers. A responsive and collaborative approach can help overcome challenges and keep the transaction moving forward.

Planning ahead

If you are considering buying or selling a business, early preparation and professional advice can help ensure the process runs efficiently and successfully.

Taking the right steps at the outset can help maintain momentum, protect value and ultimately get the deal over the line.

If you would like advice on preparing for or completing a business transaction, the corporate team at Gullands can guide you through each stage of the process.

Sarah Astley can be contacted at s.astley@gullands.com