When an SME owner starts exploring the idea of selling their business or acquiring another, one of the first few questions that often comes to mind is: “How long will the process take to complete?”
Unlike selling a piece of property, an M&A transaction is not something that can be done in just a few weeks. In fact, the process typically takes around 12 to 18 months from the first discussion to the signing of the final contract. If the post-merger integration (PMI) process is also included, the overall timeline can extend to another 6 to 12 months. Of course, there are cases where the process can move faster – depending on the complexity of the business and the readiness of both buyer and seller.
Wish to understand further why it takes this long? In this article, we will walk you through the overall M&A process, the estimated timeline for each stage, and most importantly, why early preparation and strategic planning can make a world of difference for business owners looking to ensure a smooth and successful transaction.
Why Does the Timeline Vary?
Many SMEs consider M&A because they see it as a quicker and more flexible exit strategy compared to an Initial Public Offering (IPO). While that is true in general, the actual timeline can still vary widely depending on the company’s condition and the complexity of the deal.
The truth is that no two deals are ever the same. The time required depends on several factors such as the industry, company size, financial condition, and geographical location of both buyer and seller. For example, a manufacturing company that owns real estate or heavy machinery may need to go through a lengthier asset and license assessment, while an IT company may focus more on evaluating its intellectual property and human capital.
Besides that, when a listed company or regulated industry is involved, additional approvals from authorities such as Bank Negara Malaysia (BNM) or MITI are required, which can easily extend the process by several months. Likewise, cross-border deals take longer due to different legal frameworks, languages, and business cultures — all of which require careful coordination between parties.
In general, the M&A process may be prolonged when:
- The deal is large-scale or involves multiple subsidiaries
- The counterparty is overseas and subject to foreign regulations
- The objectives or conditions of the deal are unclear
- Significant issues arise during the due diligence stage
These factors are often interconnected – one complication may trigger others. However, these challenges can be managed through early preparation, well-organized documentation, transparent communication, and the support of experienced advisors. We have also covered these points in another article that outlines the essential steps SMEs can take to prepare before embarking on their M&A journey. Taking these steps not only helps minimize potential delays but also ensures a more efficient process and a smoother path to closing.
With that understanding, let’s now take a closer look at the overall M&A process and explore how long each stage typically takes.
Understanding the M&A Process – Step by Step
1. Initial Consultation & Assessment (1 – 2 Months)
Every M&A journey begins with a conversation. This is when an experienced advisor meets up with business owners who are interested in exploring M&A – whether for succession planning, strategic partnerships, or future growth. The goal of the first few meetings is to understand the owner’s objectives, expectations, and challenges, as well as the company’s background and business situation.
During this stage, the advisor will also share an overview of the M&A process, clarify what to expect, and assess whether the company is ready to move forward. In some cases, owners realize they need more time to prepare before starting – and that is perfectly normal.
2. Preparation (3 – 6 Months)
Once the decision to proceed is made by the business owner, the natural next step will be preparation. This is where the groundwork begins, and it is one of the most crucial stages of the entire process.
During this stage, the advisor will work closely with the business owner to compile all relevant company information, such as financial statements, shareholding structure, operational flow, ownership details, and license details. A Non-Disclosure Agreement (NDA) is also signed at this point to ensure that all shared information remains strictly confidential throughout the process.
A business valuation is then conducted to assess the company’s fair market value, helping the owner understand where the business currently stands and what can be done to enhance its attractiveness to potential buyers. (Read here to learn more about how you can improve your business value.) Together with the owner, a suitable transaction structure or scheme is proposed.
Next, the advisor will prepare a detailed proposal-like document called the Information Memorandum (IM). This is a professional pitching document that introduces the company’s strengths and business models to potential buyers, while keeping sensitive details confidential.
The quality of preparation here directly affects how smoothly the following stages will progress.
3. Matching and Top Management Meetings (1 – 3 months)
Once the IM is ready, the advisor will start identifying and approaching potential buyers who match your objectives – for example, companies in the same industry, regional investors, or strategic partners from Japan or other ASEAN countries.
When interest is shown, top management meetings will be arranged for both parties to gather to exchange ideas, discuss vision alignment, and evaluate whether there is a good fit in terms of culture, goals, and values. This stage often involves multiple discussions before both sides agree to move forward, ensuring both sides share similar goals, building mutual trust and synergy – which sets the tone for the rest of the process.
4. Execution of MOU or LOI (1 – 2 Months)
If both parties agree to proceed after initial discussions, the buyer will then issue a Letter of Intent (LOI) or Memorandum of Understanding (MOU). This document will outline the basic terms of the deal, including the proposed structure, indicative valuation, agreed cost, and key conditions – before entering to a formal due diligence.
It also serves as a mutual commitment that both sides are serious about moving forward but do note that this is not the final contract yet.
5. Due Diligence (3 – 9 Months)
During this stage, it is like conducting a “health check” on the company, which is often the most time-consuming process. The buyer will conduct a thorough investigation of the seller’s business to examine and confirm that all information provided is accurate and that there are no hidden risks. Think of it like inspecting a house before you make the purchase — checking the foundation, wiring, and structure to ensure it’s in good condition.
The due diligence process covers several areas:
a. Financial – verifying financial statements, debts, and cash flow
b. Legal – reviewing contracts, ownership, and compliance
c. Tax – confirming tax obligations and liabilities
d. Business – understanding operations, customers, and market position
For well-prepared companies, due diligence can be completed within a few months. However, the process may take longer in cases of incomplete documentation or complex regulatory issues. This is why the first rule of M&A – early preparation – is so important. Keeping your financial records and key documents well-organized from the start can significantly shorten the due diligence process and prevent unnecessary delays.
6. Final Agreement and Closing (1 – 3 Months)
Once due diligence is completed and all major challenges are resolved, both sides move on to final negotiations and signing of the Sales & Purchase Agreement (SPA).
At this stage, the SPA serves as the final and legally binding contract that formalizes the deal. It outlines in detail what is being sold, the agreed purchase price, payment structure, and any conditions to be met during the completion stage. It also sets out each party’s obligations and representations, confirming that the information provided during the process is accurate, and includes clauses on transitional support and non-compete arrangements where applicable.
Once both parties have signed the SPA, the deal proceeds to obtain any required regulatory and license approvals and the completion of payment and transfer arrangements. When all conditions are fulfilled, ownership officially changes hands, marking the successful closing of the M&A transaction.
However, the journey does not just end there. What follows is the post-merger integration (PMI), where the buyer aligns management, teams, systems, and operations. This can take another three to six months, especially when cultural or regional differences exist.
Tips to Minimize Delays and Ensure a Smooth M&A Process
Every M&A deal is unique, but one common success factor stands out: good preparation and clear communication. Here are a few practical tips to help SME owners navigate the process efficiently:
1. Work Backwards from Your Ideal Timeline:
Start preparing early. If you plan to retire in two or three years, begin now. Early preparation gives you time to organize your documents, find suitable buyers, and avoid last-minute surprises.
2. Be Clear About Your Goals:
Ask yourself “What do I want out of this deal? Is it a smooth succession, business growth, or access to new markets?” Your answer will shape the kind of buyer you seek and how the deal is structured. When your objectives are clear, you will spend less time evaluating unsuitable buyers and can move through the matching and negotiation stages more efficiently.
3. Start When You are Ready, Not When You Have To:
Rushed decisions often lead to prolonged negotiations or unfavorable terms. Many SME owners only consider M&A when faced with pressure like declining health, market shifts, or financial challenges, which weaken their bargaining power. Starting while your business is performing well gives you greater control and flexibility. Buyers are more confident in acquiring a healthy company, and you will have time to address internal matters before they become obstacles. Early preparation not only shortens due diligence but also helps preserve your company’s value.
4. Work with Experienced Advisors:
Having the right advisor from the start is one of the most effective ways to keep the process on track. An experienced M&A advisor can coordinate the process, ensure proper documentation, anticipate potential issues, and keep communication smooth between both parties.
At Nihon M&A Center, for example, our advisors leverage decades of experience and an extensive network of strategic investors from Japan and across Southeast Asia to help business owners identify the right partner quickly and confidently. By handling complex coordination, valuations, and cross-border negotiations, we help SME owners save valuable time while achieving better outcomes. You can also learn more about the role of an experienced advisor in ensuring a successful M&A here.
It is also important for business owners to work closely with their advisors to identify and address potential issues early in the process – usually during the preparation of the IM – before they become major problems later in the due diligence process. For example, if certain business or financial concerns are identified and clearly communicated to potential buyers upfront, they can be discussed openly and resolved early. This proactive approach helps prevent last-minute surprises during negotiations and reduces the risk of the deal failing to close.
So, how long does an M&A take? The answer is: as long as it needs to, depending on the business’s situation and objectives. But as a general guide, SME owners should expect at least 12 to 18 months from initial consideration to closing. Again, the key to success is not speed, but early and careful preparation.
After all, M&A is not just about the numbers – it is a carefully, strategically planned journey that ensures the continuity of your legacy, your employees, and the future of the company you have built.
Ready to explore your M&A options?
Nihon M&A Center can guide you through every step of the journey, helping you achieve the most optimal timeline and outcome for your business. Contact Us today for a free consultation and discover how we can help you plan your next chapter with confidence.
