What are the main stages of an M&A process?

  • Posted by: Frédérique Pardon

An M&A process typically takes between 12 and 24 weeks from initial preparation through to closing, though complex deals can run longer. The exact timeline depends on the size of the transaction, the quality of the target’s financial data, and how smoothly negotiations proceed. Below, we answer the most common questions about how an M&A deal unfolds from start to finish.

How long does a typical M&A process take?

A typical M&A process takes between 12 and 24 weeks, divided across three broad phases: preparation (roughly 4 to 8 weeks), execution, including due diligence and negotiation (8 to 16 weeks), and closing followed by integration (which continues well beyond signing). Simpler transactions between smaller companies can close faster, while cross-border or complex deals often stretch beyond 24 weeks.

The preparation phase is often underestimated. Before any target is approached, the acquiring company needs a clear investment thesis, a defined target profile, and a realistic view of its own financial capacity. Skipping this groundwork is one of the most common reasons deals stall or fall apart later in the process.

Execution is where the timeline becomes hardest to predict. Due diligence can surface unexpected issues that require additional investigation. Negotiations on price and deal structure can take multiple rounds. Regulatory approvals, if required, add further time. The best way to protect your timeline is to enter the execution phase with clean, well-organized financial data and a clear view of what you are willing to accept.

What happens during the due diligence stage of an M&A deal?

Due diligence is the structured investigation a buyer conducts into a target company before committing to a transaction. It covers the target’s financial statements, cash flow, debt position, profitability trends, tax compliance, legal obligations, and operational performance. The goal is to verify that what was presented during negotiations reflects reality and to uncover any risks or liabilities before the deal closes.

Financial due diligence review and validation is typically the most intensive workstream. It examines historical performance, the quality of earnings, working capital dynamics, and the reliability of forward-looking projections. A buyer wants to understand not just what the numbers say, but why they look the way they do and whether that performance is sustainable.

Beyond the financials, due diligence usually covers:

  • Legal and compliance: Contracts, intellectual property, litigation risk, and regulatory standing
  • Tax: Historical tax positions, outstanding obligations, and potential exposures
  • Operations: Key customer and supplier relationships, technology systems, and operational dependencies
  • People: Key personnel, employment contracts, and any retention risks post-closing

The findings from due diligence directly influence the final purchase price and deal structure. Material risks discovered during this phase often lead to price adjustments, specific representations and warranties in the purchase agreement, or, in some cases, a decision to walk away from the deal entirely.

What is a letter of intent in an M&A process?

A letter of intent (LOI) is a non-binding document that outlines the key terms a buyer and seller have agreed on in principle before the formal transaction documents are drafted. It typically covers the proposed purchase price, the deal structure, exclusivity arrangements, and the expected timeline for completing due diligence and closing. Signing an LOI signals that both parties are serious and ready to move into the more intensive stages of the process.

While most of an LOI is non-binding, certain clauses are legally enforceable. Exclusivity provisions, which prevent the seller from negotiating with other buyers for a defined period, are almost always binding. Confidentiality obligations are also typically binding from the moment the LOI is signed.

The LOI serves an important practical function: it forces both sides to align on the headline terms before significant time and money is spent on due diligence and legal documentation. Discovering a fundamental disagreement on price or structure after weeks of due diligence is costly and avoidable. A well-negotiated LOI reduces that risk by surfacing the key issues early.

How is the purchase price determined in an M&A transaction?

The purchase price in an M&A transaction is determined through a combination of financial analysis, valuation methodology, and negotiation. Common valuation approaches include discounted cash flow analysis, comparable company multiples, and precedent transaction analysis. The final price reflects not just the target’s financial performance, but also the strategic value the buyer expects to create after the acquisition.

Valuation is rarely a single number. Buyers and sellers typically approach negotiations with different views on value, shaped by different assumptions about future performance, risk, and synergies. Bridging that gap is one of the central challenges of any deal.

Several factors influence where the final price lands:

  • Quality of earnings: Recurring, predictable revenue commands a higher multiple than one-off or volatile income
  • Growth outlook: Buyers pay for future potential, not just historical performance
  • Risk profile: Customer concentration, operational dependencies, and margin stability all affect how a buyer discounts its valuation
  • Market conditions: Sector multiples and the availability of financing influence what buyers are willing and able to pay
  • Deal structure: Earn-outs, deferred payments, and equity rollovers can bridge valuation gaps without changing the headline price

Disciplined valuation means knowing your walk-away point before negotiations begin. Overpaying for a target is one of the most common reasons M&A deals fail to deliver their expected returns, making independent validation of assumptions a critical step before any offer is made.

What happens after an M&A deal closes?

After an M&A deal closes, the focus shifts from completing the transaction to making it work. This phase, known as post-merger integration, involves aligning the financial and operational structures of the two organizations, realizing the synergies that justified the deal, and establishing clear governance and reporting processes. Integration is where the real value of an acquisition is either created or lost.

The first 90 to 100 days after closing are widely considered the most critical. Decisions made in this window set the tone for how the combined organization operates and signal to employees, customers, and partners what the acquisition means in practice.

Key integration workstreams typically include:

  • Financial alignment: Consolidating reporting structures, harmonizing accounting policies, and establishing a unified forecasting process
  • Operational integration: Aligning systems, processes, and supplier relationships across both entities
  • People and culture: Communicating clearly with teams, addressing retention risks, and managing cultural differences
  • Performance tracking: Setting measurable targets for the value drivers that justified the acquisition and monitoring progress against them

Integration planning should begin well before closing, not after. Companies that treat integration as an afterthought consistently underperform on the synergies they projected during the deal. The more detailed and realistic the integration plan at the point of closing, the faster the combined business can move from transaction mode to value creation mode.

How we support your M&A journey

We guide companies through every stage of an M&A process from a CFO perspective, with a focus on disciplined decision-making and genuine value creation. Our approach is built around one central question: not just whether a deal can be done, but whether it should be done.

Our M&A expert advisory services cover the full transaction lifecycle:

  • Finance Maturity Assessment: We establish a factual baseline of financial quality and deal readiness before anything else moves forward
  • Strategy and investment thesis: We help define the rationale, target profile, and value-creation logic with clear valuation boundaries
  • Evaluation and validation: We independently assess targets on financial performance, risk exposure, and strategic fit
  • Transaction and execution: We manage due diligence, valuation, and negotiation through a structured and controlled process
  • Integration and value realization: We stay involved after closing to ensure the deal delivers on what it promised

Our professionals bring embedded financial leadership and continuous alignment between management, shareholders, and advisors throughout the entire process. If you are considering an acquisition, divestment, or exit and want a partner who combines rigorous financial thinking with practical execution, contact our M&A advisory team to explore how we can support your next transaction.

Frequently Asked Questions

How do I know if my company is ready to pursue an acquisition?

Readiness for an acquisition goes beyond having available capital. Your financial data should be clean, well-organized, and capable of withstanding scrutiny, since weak internal reporting is one of the most common causes of deal delays. You should also have a clearly defined investment thesis and a realistic view of your integration capacity before approaching any target. A finance maturity assessment is a practical first step to identify gaps before the process begins.

What is the difference between an asset deal and a share deal, and does it matter?

In a share deal, the buyer acquires the legal entity itself, including all its assets, liabilities, contracts, and obligations. In an asset deal, the buyer selects specific assets and liabilities to acquire, leaving the rest with the seller. The distinction matters significantly for tax treatment, liability exposure, and how contracts and employees transfer. The preferred structure often differs between buyer and seller, making it a common negotiating point that should be addressed early in the LOI stage.

What are the most common reasons M&A deals fall apart before closing?

The most frequent deal-breakers are unexpected findings during due diligence, an unbridgeable gap between buyer and seller valuations, and regulatory or financing obstacles that emerge late in the process. Poor preparation on the seller's side, such as disorganized financial records or undisclosed liabilities, is also a leading cause of deals collapsing. Many of these risks can be mitigated by investing in thorough preparation before the process formally begins and by surfacing key issues at the LOI stage rather than discovering them mid-due-diligence.

What is an earn-out, and when should I consider using one?

An earn-out is a deal structure in which part of the purchase price is deferred and paid only if the acquired business hits agreed performance targets after closing. It is typically used to bridge a valuation gap when the buyer and seller have different views on future performance. While earn-outs can make a deal possible, they introduce complexity around how performance is measured and can create post-closing disputes if the metrics and governance are not defined precisely in the purchase agreement. They work best when the targets are objective, measurable, and within the seller's control.

How do regulatory approvals affect the M&A timeline, and how can I plan for them?

Regulatory approvals, particularly merger control filings required by competition authorities, can add several weeks or even months to a deal timeline depending on the jurisdictions involved and the combined market position of the two companies. The key is to identify early in the process whether filings are required and in which jurisdictions, so that submissions can be prepared in parallel with other workstreams rather than sequentially. Engaging legal counsel with regulatory expertise at the outset prevents this from becoming a last-minute bottleneck that delays an otherwise ready-to-close transaction.

How should a seller prepare their business for a sale to maximize value?

Sellers who achieve the strongest outcomes typically spend 6 to 12 months preparing before formally launching a process. This means cleaning up financial reporting, resolving any outstanding legal or tax issues, reducing customer concentration where possible, and documenting key operational processes so the business is not overly dependent on specific individuals. Buyers pay higher multiples for businesses that are predictable, well-documented, and easy to understand, so preparation directly translates into a stronger negotiating position and a smoother due diligence process.

What role does a CFO or financial advisor play in an M&A transaction, and do I need one?

A CFO or financial advisor provides the analytical rigor, process discipline, and negotiation experience that most management teams do not encounter frequently enough to develop in-house. On the buy side, they validate the investment thesis, stress-test the valuation, and manage due diligence so that risks are identified before commitments are made. On the sell side, they prepare the business for scrutiny, frame the financial story compellingly, and protect value through the negotiation. For any transaction of meaningful size, independent financial guidance typically pays for itself many times over through better pricing, fewer surprises, and faster execution.

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