Seller Prepare

August is a good time for sellers to comb through their private equity holdings and get internal approvals to move forward with a sale.

As a buyer, I have worked through part of more than one Christmas holiday for a transaction introduced by a seller just a few days prior. Late timing, especially in the fourth quarter, may kill the possibility of getting something done by year-end. At a minimum, rushing at the last minute may not fetch the highest price.

Many sellers seek to clean up their balance sheets by year-end. To accomplish this, sellers should plan to kick off the process with buyers in early-September or the beginning days of October – especially for larger portfolios. Before early-September, though, many buyers may still be busy pricing transactions for September 30 closings.

Year-end closes as winter begins to bite, and closing processes can feel like they’re moving as slow as molasses – so budget accordingly! Working backwards:

  • December 31: Fund and close!
  • November 1-15 – Sign PSA: While it may move faster, most lawyers and GPs are busy at the end of the year, which means 6-8 weeks is a reasonable timeframe in which to wrap a process up. This is especially true if there are transfer restrictions or foreign funds to work with. Even with this time allowance, it’s important that everyone stay on top of the process.
  • Late October to November 1 – Select buyer.
  • Mid-September and October – Buyers process documentation, speak with GPs (in certain cases), model the transaction, and submit bids to agree on with seller.

Approaching buyers early for year-end closes may also find buyers with more deal team resources on-hand and a year end deal dollar target still looking for assets.

Whether working with an agent, running a process themselves, planning on multiple bids, or only negotiating with one buyer, sellers would be wise to not dally!