What is the process for completing an acquisition?

Takeaway: An acquisition is a complex, multi-phased process that moves from initial conversations and a signed LOI, through exhaustive due diligence, to the final negotiation and execution of the definitive merger agreement.

The sale of your company is not a single event; it is a formal, structured process that can take anywhere from three to six months, or even longer, to complete from start to finish. It is an intense period that will require a significant amount of your time and attention as a founder, as well as the coordinated effort of your legal and financial advisors.

While every deal is unique, a standard M&A process follows a clear and predictable sequence of phases. Understanding this roadmap is key to managing the process effectively.

Phase 1: The Pre-Sale Preparation and IOI

  • Internal Preparation: As we've discussed, this is the critical "reverse due diligence" phase. You will work with your lawyers and bankers to get your legal and financial house in perfect order and to prepare your virtual data room.

  • Initial Outreach: Your investment banker will begin to discretely contact a curated list of potential strategic buyers.

  • Indication of Interest (IOI): Interested buyers may submit a non-binding "Indication of Interest," which is a preliminary, high-level expression of their interest and a rough valuation range.

Phase 2: The Letter of Intent (LOI) and Exclusivity

  • Management Presentations: You will give formal presentations to the small handful of buyers who have submitted the most promising IOIs.

  • Submitting the LOI: Based on these presentations, the top contender will submit a formal, detailed Letter of Intent (LOI), which outlines the proposed purchase price and key terms of the deal.

  • Negotiation and Signing: You will negotiate the terms of the LOI with the buyer. Once it is signed, you enter into a binding exclusivity or "no-shop" period (typically 30-60 days), where you are legally prohibited from negotiating with any other potential buyers.

Phase 3: Due Diligence

This is the most intense phase of the process. The buyer and their army of lawyers, accountants, and consultants will conduct an exhaustive, "full-body scan" of your entire company.

  • Opening the Data Room: You will grant the buyer's team access to your virtual data room.

  • The Diligence Gauntlet: They will review every contract, every financial statement, and every line of code. They will conduct technical and management interviews. Their goal is to verify all of your claims and to uncover any hidden risks or liabilities.

Phase 4: Definitive Agreements and Closing

  • Drafting the Merger Agreement: In parallel with the due diligence process, the lawyers for both sides will be drafting and negotiating the final, definitive purchase agreement. This is a massive, complex contract that can run into hundreds of pages.

  • Closing: Once diligence is complete and the definitive agreement is finalized and signed by all parties, the transaction "closes." The funds are wired, the stock is formally transferred, and your company officially has a new owner.

Navigating this long and demanding process requires a coordinated team effort, a deep commitment to transparency, and the guidance of experienced M&A advisors.

Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.