One of the most asked questions from potential sellers in the middle market of Aerospace and Defense is: “How long does a sale take?”
Over the past 22 years, our statistics show an average of 27 weeks, just over 6 months, from the time of being retained by a seller to closing. While this average is important, the length has varied from as short as three weeks to as long as two years.
The sale process can roughly be broken into 5 phases:
- Pre-market diligence
- Preparation of Go-To-Market deliverables
- Solicitation and down-selecting buyers
- Post Letter of Intent buyer due diligence
- The negotiation of a purchase agreement and closing
In most every case, the longest phase is 4, Post letter of Intent Buyer Due Diligence. While most Letters of Intent have a stated exclusivity period of 60-90 days for buyer due diligence, many run well beyond the initial 60-90 days, for reasons that we will explain in another Deal Note.
In those cases when a sale has taken longer than 27 weeks, the root cause is almost always issues with diligence (Pre-market or Post Letter of Intent Buyer). Frequent diligence issues include: environmental, customer contracts, accounting, human resources compliance, and more frequently now – cyber security.
As we have said in many of our Deal Notes, good preparation is the key to a successful sale in the middle market of the aerospace and defense industry. Similarly, good preparation can greatly reduce the risk that a sale process will take longer than necessary.
Have a great day everyone.