Pre-acquisition Planning Timeline for Corporate Buyers

Pre-acquisition planning is a systematic process that corporate buyers undertake, which assists with evaluating and preparing for potential business acquisitions. This is vital, as proper planning reduces risks, identifies opportunities, and contributes to eventual successful integration.

A well-structured approach to planning before acquisition isn’t just a practical advantage, but also avoids costly mistakes once acquisition gets underway. Ascot provides pre-acquisition support worldwide, not limited to specific regions. So, we’ve developed this timeline to offer entrepreneurs and corporations looking to acquire businesses globally with an actionable roadmap to guide their efforts.

Understanding Pre-acquisition Planning Fundamentals

In the context of corporate transactions, planning in the pre-acquisition period involves taking structured steps toward formally completing the transaction process with a target entity. It clarifies goals, assesses readiness, and identifies opportunities and risks alike. Planning is important whether the acquisition is strategic in nature—focusing on long-term operational alignment—or financially focused to prioritize efficient return on investment (ROI).

Solid planning involves a range of stakeholders, including executive leaders, finance teams, regulatory advisors, and external consultants. These figures can help set and maintain focus on the clear acquisition objectives that are essential to informed decision-making on the road to acquisition.

Understanding the importance of setting realistic timelines for acquisition is also a key part of good planning. A common misconception is that acquisitions are fast. A well-executed transaction can actually take anywhere from 6 months to a few years, making a careful pre-acquisition roadmap a valuable tool for staying on track.

Phase 1 – Strategic Assessment and Goal Setting (Months 1–2)

This phase begins with corporate buyers setting specific criteria that targets must meet, often building target company profiles that include revenue thresholds, industry positioning, and innovation potential, among other characteristics.

The company will also focus on internal elements, such as conducting capability assessments to confirm operational and financial readiness to integrate an acquired entity, alongside clarifying the strategic rationale for doing so.

From here, the acquisition team determines and sets budgeting parameters, alongside considering financing structure operations that can involve debt, equity, or a combined approach. The team will then develop goals for the process to ensure ongoing alignment with overall corporate strategy.

Phase 2 – Market Research and Target Identification (Months 2–4)

Attention shifts during the second phase to external elements. Buyers typically conduct in-depth industry analysis and map the market to gain a better understanding of sector trends and competitive dynamics. This can also point to viable acquisition targets, which will then be screened to establish alignment with the buyers’ strategic objectives, alongside confirmation of where the targets fit in the competitive landscape, how they’re positioned in the market, and any potential red flags. Additionally, an M&A advisor, financial consultant, and operational experts will evaluate the regulatory environment within relevant jurisdictions and identify any compliance challenges related to targets.

Phase 3 – Initial Due Diligence and Valuation (Months 4–6)

Following shortlisting of some potential target acquisitions, companies will perform some basic initial due diligence. This involves building a preliminary profile of each using publicly accessible information, after which a high-level financial analysis will be performed to determine likely returns and preliminary valuations.

Assessors will also evaluate management performance and the company’s operational capabilities, seeking to understand the long-term viability of each candidate. Any potential operational, cultural, or market synergies alongside challenges to successful integration will be identified, too. Finally, the acquisition team will develop initial investment theses to present to stakeholders, justifying further engagement with acquisition candidates.

Phase 4 – Approach Strategy and Initial Contact (Months 6–7)

After initial due diligence, companies will start to develop an approach strategy that directs engagement with acquisition targets. This usually begins with preparing confidentiality agreements and other documentation, such as a letter of intent. The acquisition team also develops a structured set of communication protocols, ensuring consistent interactions with the target company. 

From here, there will be initial discussions with the management of the intended acquisition, which can act as a litmus test for strategic alignment alongside building rapport. If these discussions are fruitful, the acquisition team will negotiate access to company operations and records for deeper due diligence.

Phase 5 – Comprehensive Due Diligence (Months 7–10)

This is typically the most resource-intensive phase of pre-acquisition. Buyers will execute financial due diligence that assesses performance, identifies liabilities, and highlights any working capital needs. There will also be operational reviews that establish efficiency levels, among other elements, alongside commercial evaluations that determine current market fit and growth potential.

Regulatory compliance will face close scrutiny, with acquisition teams identifying any disputes or risks that may affect the transaction. This is particularly vital for cross-border M&A, where regulatory issues can be more complex. Technology and intellectual property (IP) will be subject to audits, too, both for the impact on value and the potential for future innovations. Finally, the target’s human capital will be assessed for skills, gaps, and likely cultural fit.

Phase 6 – Deal Structuring and Negotiation (Months 10–12)

This is the pre-closing phase that is focused on structuring the transaction and moving toward finalization of terms. The parties will negotiate on the purchase price and establish mutually acceptable payment mechanisms, such as earn-outs and escrow, alongside dividend policy where necessary. Furthermore, the parties will address any key contractual and regulatory components of the deal, such as the representations, warranties, and indemnities that assign and balance risk.

From here, an integration timeline needs to be developed, with resource allocation planned to ensure people, systems, and processes are in place to support an effective transition. The parties will then prepare final documentation—shareholder agreements, board approvals, and regulatory filings among them—to meet closing requirements.

Resource Allocation and Team Management

Among the most important planning components during pre-acquisition are the allocation of resources and strong project management to usher companies through the timeline. Early on, companies should assess the need and availability of specific internal expertise—including capable team leads—alongside where external advisors will be advantageous.

Executives should collaborate with acquisition leads to establish a responsible budget for due diligence and transaction costs. An important part of this is allocating funds for advisory fees that help mitigate risks.

Team leads will also need to carefully plan cross-functional team coordination, ensuring activities run efficiently to timelines and support one another’s efforts. Furthermore, there must be consistent stakeholder communication throughout, alongside clear approval processes that maintain strategic alignment on the road to acquisition.

FAQs

How long does typical pre-acquisition planning take for corporate buyers?

Usually around 12 months, although this can vary depending on complexity and jurisdictional factors.

What factors can extend or compress the pre-acquisition planning timeline?

Regulatory delays, unexpected due diligence findings, and complex negotiations can extend timelines, while good preparation and internal readiness can speed up processes.

When should companies begin pre-acquisition planning before actively pursuing targets?

At least 6 to 12 months before approaching targets is typical to ensure internal readiness.

What are the most critical phases in the pre-acquisition planning process?

Strategic assessment, due diligence, and deal structuring are among the most critical phases.

How does pre-acquisition planning differ for international versus domestic acquisitions?

International acquisitions are more complex, with various regulatory approvals across jurisdictions, alongside currency and cultural considerations.

What resources are typically required during the pre-acquisition planning phase?

Cross-functional internal teams, regulatory and financial advisors, due diligence experts, and project management support are among the key resources required for comprehensive planning.

How can companies maintain confidentiality during the planning process?

Setting clear communication protocols, issuing non-disclosure agreements, and limiting internal access to information helps maintain confidentiality.

What role do external advisors play in pre-acquisition planning?

They bring specialised expertise in a range of areas, including compliance, valuation, tax structuring, and operations.

References

Ross, S. (2021, August 31). How Long Does It Take to Execute an M&A Deal?. Investopedia. https://www.investopedia.com/ask/answers/072915/how-long-does-it-take-execute-ma-deal.asp

Grant, M. (2022, December). Pre-merger acquisition capabilities: A study of two successful serial acquirers. Science Direct. https://www.sciencedirect.com/science/article/pii/S0263237322001438 

Alimov, A, et al. (2017, August). Intellectual property rights and cross-border mergers and acquisitions. Science Direct.  https://www.sciencedirect.com/science/article/abs/pii/S0929119917302614