How a Sale is Executed ?

0) prospective company for sale "sellco" contacts a few banks in order to determine how much it could sell for and who might be interested in buying. sellside bank creates a pitch which details valuation and potential financial/strategic buyers 1) sellco agrees to let sellside bank manage its auction process. as part of the process, a formal letter is signed which details the scope and terms of the engagement as well corresponding fees to be paid 2) sellside bank performs preliminary "due diligence" on sellco and uses the information obtained from due diligence to put together a financial model and offering memorandum. during this time, comps are run to assist in establishing a valuation range, and industry research is done as well. 3) while junior members of the deal team are griding away at the model and memorandum, senior deal team members are busy determining potential financial/strategic buyers that they might invite into the auction process 4) after the memorandum is done, it's typically sent out to the parties identified in step 3 along with a process letter which details how financial or strategic buyers will express their interest in the sellco. the process letter typically indicates that expressions of interest are non-binding 5) the parties referenced in step 3 then take the contents of the memoradum and go through their own internal processes in order to determine interest level and valuation 6) parties which are then interested in proceeding fully with the process will then draft a non-binding letter of interest/intent which will typically contain a valuation range and nominal details on deal structure and consideration 7) sellside bank will then filter through the received letters of intent. at this point, certain parties will be cut due to low valuation ranges, improper deal structures (i.e. structure creates too much tax liablity for seller, etc.), or shitty consideration (i.e. sellco owners want a stock deal as opposed to a cash deal, etc.) 8) parties which make the cut will then typically be invited back for round 2 which consists of management presentations and due diligence. the sellside bank will typically coordinate presentations and site visits on behalf of sellco management 9) parties at this stage will then perform operational, financial, legal, environmental, and tax due diligence in order to firm up valuation and other strategic concerns. once again, the sellside bank will coordinate these issues on behalf of sellco 10) parties which are still interested after this point will then submit another letter (this time binding) which will contain full deal terms, method of consideration, etc. the sellside bank will work with sellco management to select the best potential acquirer and also assist in negotiating price/terms 11) the party that is ultimately selected will draft a purchase agreement, which will serve as the official legal document that will consummate the deal. 12) the purchase agreement is then signed by both parties after extensive negotiations, making the deal official 13) sellside bank collects fee for the completion of the transaction 14) if financing is needed, the sellside bank may also participate if it has a financing/capital markets arm (however, because investing and financing are two separate issues, this is really almost irrelevant to the selling process)

obviously, anyone who's been in banking will realize a few things have been left out. however, the point here is to give a newbie a general idea as to what the process is like as opposed to creating an all-encompassing and exhaustive list.