The timeline for selling a software business can vary greatly; each acquisition is unique and there are many factors that can impact the speed and success of a sale.
Though the complexity of each stage and the size of the deal will determine how long it takes, the overall structure of the process usually remains consistent.
We sat down with our Head of M&A, Ken Barragan, to find out more about each phase of an acquisition and what you can expect if you’re planning to sell your business in the future.
Preliminary Conversations
The M&A team at Vesta introduces itself to the business owner, focusing on understanding the shareholders’ aspirations, the company’s market and growth potential, and how the company will fit within the group from a market sector and cultural perspective. Working with the shareholders, we start exploring what the future may look like under a potential collaboration, how interests may align and what a mutually beneficial relationship may look like.
Valuation
Once the conversation advances from a preliminary introduction to interest in pursuing a potential transaction, we request some high level financial data from the business, including historical performance, projections, customer concentration, personnel, etc. Following a detailed analysis of the data and discussions with the shareholders, we derive a preliminary, high level valuation which we share with the shareholders to advance the conversation.
Due diligence
Before proceeding with an acquisition, our M&A team take the time to carry out due diligence to gather as much information about the business as possible. This crucial step helps to build a clear picture of the current and historical state of the business and the market it operates in, whilst also identifying any key risks and issues. The information gathered during this stage will allow us to consider how best to integrate the business into the group going forward.
Deal execution & completion
The steps taken during due diligence help to organise the paperwork and information required for the disclosure process in the Share Purchase Agreement (SPA), which sets out the framework of the transaction. Once terms have been negotiated and eventually agreed, both parties sign the SPA and the transaction is made.
Post-acquisition
Following the successful completion of an acquisition, the next step for the team at Vesta is to integrate the new business into the group. We like to ensure continuity for any new companies joining the family, which helps them settle in and align with our processes and best practices.
Going forward, our focus is always on providing the resources, expertise and financial support to facilitate organic growth for the business, whilst giving employees the opportunity to develop their talent and progress in their careers too.
If you have any questions about M&A or finding a new home for your business, get in touch with our team today. We’d love to hear from you.
