The Sale Process & Timeline

1. Before Anyone Knows: Preparation

Sellers underestimate two things: how long a sale takes, and how much of that time goes on work they could have done before it started. What follows is the honest shape of a mid-market South African deal — and it begins in a stage almost everybody skips and almost everybody later regrets.

Three to six months before you speak to a buyer, you get your house in order. The financial statements are signed off and the management accounts agree with them. The employee schedule exists and is accurate. The contracts file is complete, with signed copies and the change-of-control clauses identified. Your company records are in order: share register, directors’ appointments, resolutions, minute book. The tax conversation has happened. And any known problem — an old SARS query, a disputed dismissal, a property with unapproved building plans — is either fixed or written down with a number next to it.

Nobody enjoys this. It is also the only part of the process where you work without a buyer watching, without a clock running and without anyone’s leverage over you. Everything you leave undone gets done later, at speed, in front of an audience that is pricing what it sees. Our companion page on preparing your business for sale works through this stage item by item.

2. The Approach & the Confidentiality Agreement

Then either someone approaches you, or your advisor runs a process and approaches several people. A process takes longer and usually produces a better price, because competition does more for a valuation than negotiation does.

Either way, the first document is a confidentiality agreement, often called a non-disclosure agreement or NDA. It is short and largely standard, but two things in it are worth your attention:

Allow two to six weeks here, mostly first meetings and the buyer forming a view.

3. Heads of Terms — the Document That Decides Your Deal

The buyer then puts the deal on paper in two to six pages. Price, structure, what is conditional, what is deferred, timetable, exclusivity. It goes by several names — heads of terms, term sheet, letter of intent — and they mean the same thing.

You will be told it is not binding, and on price that is largely true. Do not let that reassure you. In practice this document decides your deal. Everything afterwards is a retreat from it, never an advance on it. Once a buyer’s board has approved a number and a shape, that shape is what the lawyers are instructed to document, and reopening it looks like bad faith even when it is entirely reasonable.

So the arguments worth having are the ones you have here, not in the agreement six weeks later:

One part usually is binding: exclusivity, which stops you talking to anyone else for a period. Keep it as short as the buyer’s diligence honestly requires, because from the day you sign it your only alternative is no deal.

4. Due Diligence

The buyer’s advisors now examine the business: legal, financial, tax, and increasingly technology and B-BBEE. You put documents into a data room, they ask questions, you answer, they ask better questions. Our dedicated page on due diligence covers what buyers look for and how to survive it.

Expect requests for everything a seller’s guide could cover, plus a great deal you consider irrelevant. Expect the questions to sharpen in week four, when the buyer’s team has found the two or three things they actually care about. Expect it to consume your financial manager. Six to ten weeks is normal, and it runs alongside the drafting rather than before it.

5. Drafting & the Disclosure Exercise Underneath It

The buyer’s lawyers produce a draft sale agreement, usually somewhere between forty and a hundred pages, and the negotiation runs through several rounds over six to twelve weeks. Most of it is the machinery covered elsewhere in this hub — the sale agreement itself, the price mechanism, the warranties, the conditions.

Running underneath it, and taking longer than anyone plans for, is the disclosure exercise: reading each warranty against the actual business and writing down, specifically, every place where the statement is not quite true. This is done by you and your managers, not by your lawyers, because only you know the answers. It is the highest-value work in the transaction and it is invariably started too late.

6. Signature, the Conditions Period & Closing Day

Signature is a day, usually electronic, with documents circulated and signed in counterparts rather than everyone in a room.

Then comes the conditions period: competition approval where the deal needs it, bank funding, landlord and customer consents, licences, the creditors’ notice on a business sale. Four weeks if the list is short. Four to six months if the competition authorities are involved. Throughout, you run the business under restrictions and the buyer holds a veto over anything unusual.

Closing day is a choreographed hour on a video call, almost entirely administrative:

Then it is done — except that it is not quite done.

7. The Tail

The deal keeps living after closing, and you should know for how long:

8. The Full Timeline at a Glance

Heads of terms to signature is roughly three to six months for a straightforward deal. Add the preparation before it and the conditions period after it, and a sale a founder imagines taking “a few months” occupies the best part of a year, sometimes more. Plan your life accordingly, and the business too, because it still has to perform while all this is happening. Buyers notice when it does not.