How Long Does an M&A Transaction Take?

Most lower mid-market ($10-50M) transactions take between three and six months from signed letter of intent to closing. Can it be done in two months? Yes, but if there is financing involved, that timeline is virtually impossible to meet. The more useful question is why some deals take three months and others take eight, and what you can control.

The Timeline Starts at the LOI, Not the First Conversation

The three-to-six-month window begins when both parties sign a letter of intent. Everything before that (the initial conversations, the introductions, the preliminary negotiations) can take just as long. A transaction that closes in five months from LOI may have taken a full year from first contact.

This matters for planning. If you are thinking about selling your business in the next two to three years, the conversation with your M&A lawyer should be happening now, not when you have a buyer at the table. Speed of closing is not the only consideration here; the tax planning necessary to maximize the dollars in your jeans generally requires that the right structure be in place at least two years prior to sale.

What Happens Inside the Timeline

Once an LOI is signed, a lower mid-market transaction moves through three main phases.

First, due diligence. A buyer's counsel will investigate your business thoroughly; financials, contracts, employee arrangements, litigation history, regulatory compliance, real property, and more. This process typically runs four to eight weeks. The cleaner your records and the more organized your data room, the faster it goes. Businesses that are unprepared for due diligence add weeks to this phase and, in some cases, give a buyer grounds to renegotiate the price. Not having the right advisors in place is also a reason deals are delayed. Having a quality and responsive accountant is critical. Also, when buyers find pre-existing debt and security obligations, they will spend more time reviewing them.

Second, the definitive agreement. Once due diligence is substantially complete, counsel on both sides negotiate and draft the purchase agreement. This is where the deal gets documented in full; representations and warranties, indemnities, closing conditions, post-closing obligations, and all the mechanics of the transaction. Although these look like standard-form documents, they are not. An agreement drafted by the purchaser will contain a myriad of purchaser-friendly terms that the seller’s counsel will have to parse through and negotiate. Failure to allocate the appropriate time to finalizing the terms in the definitive agreement can cost the seller significant sums of money. A straightforward deal moves through this phase in three to four weeks. A complex deal with multiple assets, earnouts, or unusual liability exposure takes considerably longer.

Third, closing. In many transactions there is a gap between signing the definitive agreement and closing. Closing conditions need to be satisfied; financing arranged, regulatory approvals obtained, third-party consents secured. There are often between twenty and fifty other documents that need to be finalized before closing can take place, including officer’s certificates, directions to pay, security agreements, service contracts, IP assignments, and more. In a well-organized transaction this takes two to four weeks. In a disorganized one, it can stretch indefinitely.

What Slows Deals Down

Deals do not slow down because of the law. They slow down because of the parties.

Disorganized records are the single most common cause of delay. If a seller cannot produce clean financial statements, corporate minute books, or key contracts on request, due diligence stalls. Buyers and their counsel are not unreasonable about imperfect records. They are unreasonable about records that simply do not exist or cannot be located.

Indecision at key moments is the second. Every transaction requires both parties to make decisions, often quickly. Sellers who hesitate on deal structure, indemnity caps, or earnout mechanics add weeks to timelines that did not need to grow.

The third is parties working against each other rather than toward a close. The best transactions are the ones where both sides understand that delay costs both of them money, and they act accordingly.

Slow Deals Often Die

A common phrase in the M&A world is “time kills deals”. While on the one hand, deals often move forward on a sunk-cost fallacy (i.e. the parties have spent too much time and money to walk away), deals that are messy and/or slow often die because the parties have more time to get nervous. The closing process is stressful and high tension. The language in the agreements often does not align with the oral communications taking place between the parties, causing trust to break down. This is one of the most common problems we see in the closing process, and in most instances, the parties end up getting along quite well after the transaction is done.

What You Can Do About It

The most reliable way to compress your timeline is to start preparing before you have a buyer. That means clean corporate records, organized financials, a clear corporate structure, and an understanding of your key contractual obligations. It also means working through the tax planning early; not because the tax structuring takes months to execute, but because the decisions you need to make require time to implement properly. Finally, make sure that your advisors are competent, understand your business, and are responsive. Deals often die because of incompetent advisors.

Outsiders Law works with Alberta business owners years before a transaction, not just at the closing table. If you are thinking about selling your business someday, the best time to talk to us is now.

For more on the M&A process, visit our Mergers & Acquisitions page or our Selling Your Business in Alberta page.

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Disclaimer

This article is for general informational purposes only and does not constitute legal advice. It does not create a solicitor-client relationship and should not be relied upon as a substitute for advice tailored to your specific transaction or circumstances.

If you’re navigating the complexities of M&A, remember that the details matter. For expert guidance, feel free to contact Outsiders Law.