M&A Process | What Does a "Typical" Deal Look Like?

While many sellers dream of M&A deals arriving fully formed, prepackaged, and ready for closing, the reality is that each transaction is more like a complex puzzle—one that often doesn’t completely come together until the wire transfers hit, and sometimes not until after integration.

The real work begins once the letter of intent (LOI) is signed. The LOI is the culmination of varying degrees of diligence and negotiations, setting the tone for the entire transaction and establishing its key economic terms. However, while the LOI is a crucial milestone, it’s only the starting point.

So, what happens between signing the LOI and closing? A lot. Here’s a look at the key steps that follow:

The Journey from LOI to Closing

1. Negotiating Definitive Agreements

Legal counsel drafts and negotiates the various documents required to finalize the transaction. These can include the purchase agreement, disclosure schedules, financing documents, lease assignments, employment agreements, and closing statements.

2. Ongoing Due Diligence

Financial, legal, and other forms of due diligence often continue until the very moment of closing, ensuring that everything is in order.

3. Obtaining Consents

Approvals are secured from key customers, contract partners, and relevant governmental authorities. Ensuring these contracts and licenses transfer smoothly to the buyer is critical to a successful deal.

4. Retention Agreements

Negotiating retention agreements with the seller’s key employees is often a vital component to ensure a smooth transition post-sale.

5. Securing Financing

For many buyers, securing debt and equity financing is a major aspect of the deal. Sellers should carefully evaluate a buyer’s financing position when comparing offers at the LOI stage.

6. Finalizing Financial Arrangements

Important financial details, like the calculation of working capital, are finalized based on due diligence findings.

7. Tax and Financial Advice

Tax advisors provide input on purchase price allocations and rollover tax treatment, while personal financial advisors guide sellers on how to best utilize the proceeds from the sale.

8. Addressing Additional Issues

Dozens of other details, both large and small, must be handled before the deal can close.

What Truly Makes or Breaks a Deal?

At the heart of every successful M&A transaction are three key factors: communication, collaboration, and speed. Buyers, sellers, advisors, lawyers, accountants, and financial consultants must work together efficiently and openly to keep the deal moving forward. Ultimately, the goal is to ensure a smooth closing—or, in some cases, to make the difficult decision to walk away if it’s in the best interest of the client.