How a company is sold.
Four movements, eleven stages, two clocks, and one point where bargaining leverage changes sharply. The sale of a private technology company as it is actually run – with what the evidence says about how often it works, and where it breaks.
- A sale has four movements – decide, prepare, compete, close – and the work in the first two decides most of what the last two can achieve.
- Fewer than half of the sale processes launched on one major data-room platform complete – 45% worldwide, 37% in Europe; the ones that do are prepared before launch and then run without pauses.
- Exclusivity is where bargaining leverage changes sharply: settle the commercial terms before you grant it.
Stages 1–3: before any buyer is contacted.
- 1 · The decision, and the objectives.
Not “sell or don’t” but what a win is: price, structure, your own role afterwards, your team, the company’s future. Every later trade-off – which buyer, which offer, how much certainty to pay for – is decided against this list, so it is written down first. Where ownership is shared, it is agreed first. The five paths, compared →
- 2 · Preparation: the financial spine, the readiness review, the valuation, the story.
Three years of history on one basis of accounting, reconciled; a quality-of-earnings view of what a buyer will accept as recurring; a review of everything a buyer’s diligence will test, run before any buyer tests it; a valuation by several methods that gives a defensible range and a view of what specific buyers could justify; and the information memorandum, which is not a brochure but the document a buyer’s sponsor will use to sell your company to their own committee. The data room is built now, before launch, not filled in under exclusivity while the buyer waits.
- 3 · The buyer universe.
A long list of everyone who could rationally want the company – strategics, financial buyers, the portfolio companies of financial buyers – narrowed to a prioritised list in which every name carries a written reason: what they would be buying, who inside them would sponsor it, what they have paid before, and which alternative they would weigh you against. Contact goes to the person who can say yes, not to the address that receives inbound. Who buys, and how they decide →
Stages 4–7: credible alternatives are built deliberately, not assumed.
- 4 · Approach.
An anonymised teaser of a page or two – enough for a buyer to know whether a fit is possible, not enough to identify you. Interested parties sign a non-disclosure agreement before they learn the name; then they receive the memorandum and a process letter that sets the timetable and the rules. Approaches are staged in waves so that bids arrive together, because an offer that lands three months before the next one is hard to compare with it and harder to compete against it.
- 5 · First round: questions, meetings, indicative offers.
Buyers ask questions through a controlled channel, meet management once, and submit non-binding indicative offers: a price or range, the structure they have in mind, how they would finance it, their timetable, and the assumptions the price depends on. The assumptions are the useful part. Two buyers at the same headline with different assumptions are not the same offer.
- 6 · Second round: the shortlist, the presentation, the deeper room.
A handful of buyers are given the full data room, a management presentation, site visits and expert sessions, and asked for a final offer – in a well-run process, alongside their mark-up of the draft sale agreement, so that the legal terms compete too. This is where a buyer’s own diligence teams appear, and where the questions turn from “what is this company” to “what could be wrong with it”.
- 7 · Selection and the letter of intent.
One buyer is chosen; a term sheet or letter of intent records price, structure, the main conditions and, almost always, a period of exclusivity during which no one else may be spoken to. This is the moment leverage changes hands: before it, you have alternatives; after it, you have a counterparty. Material terms left vague in the letter are settled later, in the sale agreement, after your alternatives have narrowed. What a letter of intent should specify →
Stages 8–11: the buyer verifies, the lawyers allocate risk, the money moves.
- 8 · Confirmatory due diligence.
Financial, tax, legal, commercial, technical, people – and an operations sweep. Specialist teams, often with more people on them than your finance team, re-perform the analysis the price was built on and look for what it missed. Findings become one of six things: a price reduction, a specific indemnity, a warranty in the agreement, a condition to closing, a reason to walk away – or, if the matter was disclosed and priced first, nothing at all. What diligence actually is →
- 9 · The sale agreement.
The share purchase agreement: the price and the mechanism that fixes it, the conditions to closing, the warranties you give about the company and the disclosure letter that qualifies them, the indemnities, the limits on your liability, the escrow or insurance that backs it, your covenants not to compete. It is where a headline becomes a number, and it is often negotiated for longer than the price was. What each clause does to the price →
- 10 · Signing, conditions, closing.
Sometimes the same day; often not. Between signing and closing sit the conditions: regulatory clearances where thresholds are met, third-party consents on contracts with change-of-control clauses, financing, sometimes employee consultation. The business is run under covenants meanwhile. At closing the shares transfer, the funds flow according to a schedule everyone has initialled, and the escrow is funded.
- 11 · After.
The completion-accounts true-up or the leakage claim, if the mechanism calls for one. The earn-out periods, measured by the buyer. The escrow release date. Your own transition or stay period. And the integration, on which whether the buyer’s thesis comes true – and therefore whether your contingent consideration is paid, and what happens to the company you built – largely depends. Integration & legacy, chapter 7 →
A process has a duration, and duration has a cost.
The founder’s clock is the one everybody feels: months of questions while running the company, the risk of a leak, the drift in the business while management is distracted. The buyer’s clock is quieter and matters more. A buyer’s committee approved a price on a set of numbers; every month the process runs, those numbers age, and a quarter that comes in below plan gives the buyer a reason to reopen the price, whether or not anyone calls it that. The evidence on duration does not run in one direction: the deals most likely to complete were neither the shortest nor the longest in diligence.2 Our reading of it is that the processes that complete are prepared before launch and then run without pauses.
The most expensive term in many letters of intent is the one nobody prices.
Exclusivity is usually asked for early and often given for nothing. Once it is granted, the seller’s alternatives are frozen and the buyer’s widen: diligence finds what diligence finds, and every finding is negotiated by a seller who has told the other bidders to wait. In one law firm’s private-equity deal database, roughly 94% of exclusivity periods ran sixty days or fewer in 2021; a year later nearly 40% ran longer, most beyond seventy-five days.4 Practitioners describe four to twelve weeks as the range; the number that matters is what has to be true before it starts.
Of the letters of intent that broke in 2025 on one deal platform, about a quarter died on diligence findings unrelated to earnings, a fifth on discrepancies between the seller’s earnings and the buyer’s quality-of-earnings work, and a further 8% on the business underperforming during the process – together, more than half.5 We read those three causes as a description of exclusivity granted before the company was ready to be verified. The remedy is not a shorter exclusivity clause. It is a data room that is complete before the letter is signed, a quality-of-earnings analysis the seller ran first, and a letter of intent specific enough that there is little left to reopen.
What the evidence says about one buyer versus several.
In the only recent private-M&A sample we have found, most companies were sold to one buyer: 78% of transactions were bilateral rather than competitive – sixty deals, one law firm, Australia, 2024 – and where an auction was run, the same report found fewer conditions and termination rights, and better certainty and price.6 The academic literature, nearly all of it on listed targets, is more careful than either camp likes. Boone and Mulherin found that about half of US targets in the 1990s were auctioned and half negotiated, with comparable outcomes for shareholders.7 Aktas, de Bodt and Roll found the mechanism underneath: in a one-to-one negotiation, the credible possibility that other bidders could appear raises the price, and the expected cost of an auction lowers it.8 And deals initiated by the target itself carry lower premiums than deals initiated by a bidder, a finding attributed mainly to the private information of the target’s own managers.9
The practical reading: competition prices a company, but competition is a state the buyer believes in, not a number of names on a list. A quiet process with four credible buyers who each know the others exist is competition. A broadcast to two hundred that the market can see failing is not – and the listed-company evidence, set out on the Board page, suggests a process that visibly fails can close lower than one that was never advertised. The argument as we make it to a board, with that evidence →
Six things a buyer’s team knows on day one.
The reference describes the terrain. Our process page describes how we run it: the same four movements, the week-by-week timetable, the two workloads, and the failure modes named in advance. The timing of each negotiation – what to settle before market, before exclusivity, before signing – is on the reference’s front page. How we run a process →
1 Datasite, first-half 2026 platform data (release of 23 July 2026; roughly 16,000 new deals a year on the platform): completion rate of initiated projects 45% globally, 37% in EMEA; median diligence time 181 days. Vendor dataset; measures launched data-room projects, not announced deals.
2 SS&C Intralinks with the Bayes Business School M&A Research Centre and Mergermarket, The Dynamics of Due Diligence (2024): 900+ deals announced 2013–2023; diligence measured from data-room opening to announcement; private targets 234 days on average against 125 for public targets; three clusters of roughly 49, 139 and 429 days, with the middle cluster most likely to complete and fastest to close. Mostly larger, announced transactions.
3 IBBA and M&A Source, Market Pulse Q4 2025 (350 advisers, 330 transactions; US, mostly under $50M enterprise value): letter of intent to closing three to five months across size bands; engagement to closing six to twelve months. Survey-reported.
4 Goodwin, Durations in M&A Exclusivity Periods Increased Significantly Since 2021 (May 2023), from the firm’s private-equity deal database; sample size and geography not disclosed. The four-to-twelve-week range is practitioner guidance, not a dataset.
5 Axial, Dead Deal Report (January 2026): 75 letters of intent that broke on the platform in 2025 – non-earnings diligence findings 25.3%, quality-of-earnings discrepancies 21.3%, failed renegotiation 14.7%, seller decisions 13.3%, financing 10.7%, business underperformance 8.0%. Small, US lower-mid-market, self-reported.
6 HSF Kramer (formerly Herbert Smith Freehills), Dealmakers: Australian Private M&A Report (June 2025): 60 private transactions the firm led in 2024; 78% bilateral. One firm, one country, one year.
7 Boone & Mulherin, “How Are Firms Sold?”, Journal of Finance 62(2), 2007. US listed targets.
8 Aktas, de Bodt & Roll, “Negotiations under the threat of an auction”, Journal of Financial Economics 98(2), 2010. US listed targets.
9 Masulis & Simsir, “Deal Initiation in Mergers and Acquisitions”, Journal of Financial and Quantitative Analysis 53(6), 2018 (1,268 US public-to-public deals, 1997–2012); Fidrmuc & Xia, Journal of Corporate Finance 46, 2017 (1,098 US targets, 2005–2011: premiums 27% for target-initiated against 39% for bidder-initiated deals). Public companies; the mechanism, not a number for a private European company.
The map is public. Your position on it is not.
Thirty minutes with a partner: where your company sits in this process today, what would have to be true before a letter of intent, and what we would do first. Under NDA, no engagement attached.
Reading this with a live transaction in front of you? Ask a partner about how a company is sold → No engagement, and no need to name the company.