Time and money for early-stage merger (or acqusition) of companies?


2

How much time and money does an early stage merger take?

I have an unfunded startup. I am talking to a company that has completed their Round A.
It seems like they might want to acquire / merge with my company, because my company's IP is valuable to them.

Is this feasible? How long would this take? How much lawyer money does it cost?

Legal Acquisition Selling Business

asked Mar 6 '10 at 10:59
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John
96 points

1 Answer


2

Anywhere from 1 month to 9 months, depending on the following:

  • Managements desire to do the deal (on both sides)
  • Funds for the deal are in place
  • You can agree upon a price and terms
  • Due diligence shows no surprises

The costs vary depending on the deal size and the amount of lawyer time. I would recommend you put a cap on it during your negotiations. As an example, let's say it's a $1M deal. It will probably cost each side between $10-$25k in lawyer fees. Again, this is all dependent on the complexity of the deal and how much lawyer time you use.

As a start, you should do a letter of intent that frames the deal and then negotiate all the terms until you come to an agreement. Once you have that in place, then you can let the lawyers loose on it.

answered Mar 6 '10 at 12:58
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Jarie Bolander
11,421 points
  • +1 for coming to agreement on a good term sheet before spending much on lawyers. Legal fees can easily be $50+K if you let them do too much due diligence. – Dane 9 years ago

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