One question publishers frequently ask when they decide to
sell is, “How long will the process take?” A fair question, and one for which
there is no simple and universal answer. There is, however, an important lesson
associated with this question, and that is: be prepared to devote months, and
maybe longer, to complete the transaction. Sellers who are in a hurry are at a
distinct disadvantage.

Publishers are often surprised, even shocked, to learn how long the process may
take. In today’s robust M&A market, it’s easy to assume eager buyers will
descend upon an available media property and race to complete the deal. That is
usually not the case, especially with smaller magazine operations.

Let’s analyze the components of a transaction and see why it can be such a
time-consuming process:

• Gathering and compiling information about the property that’s going on the
market—including at least three years of detailed financial history—can take
weeks, especially if the data are presented in the comprehensive format of a
typical Offering Memorandum (“book”).

• Reaching potential buyers, executing non-disclosure agreements, delivering
initial documents, and allowing buyers adequate time to evaluate the data and
respond with questions can consume months, especially with busy executive
schedules and a profusion of possible delays: Vacations, annual conferences,
and more.

• Meeting with potential buyers and negotiating the terms and conditions of the
deal may also take weeks or months. This process may involve a number of
personal meetings and conference calls. Since most publishers have other
priorities—such as running the business—this step, too, is subject to delays
and interruptions.

• Even the seemingly simple task of executing a letter of intent (LOI) can drag
on for an eternity. It is at this point that outside attorneys often become
involved, and it can take time to hammer out language acceptable to all
parties.

• Remember, the LOI is a non-binding agreement, and many a deal has fallen apart
at this juncture. The seller, often discouraged and frazzled, has by now
invested months and must now return to square one—and possibly face diminished
market potential.

• If the transaction moves forward— and the negotiating parties are reasonably
cooperative—the due diligence process should be completed quickly—a matter of
days at the most.

• But executing the final purchase agreement can be another story. Even a small
transaction may require a fairly detailed document, particularly when
non-competes, consulting or employment agreements, promissory notes, and asset
allocations are involved. Again, it consumes time, and requires a lot of give
and take, for attorneys to craft language that is acceptable to all parties.
Meanwhile, the buyer may experience additional delays in securing financing or
convincing backers of the merits of the deal.

• The actual closing can be completed in the time it takes to sign the
paperwork. But it’s wise to remember that even after the LOI has been signed,
due diligence completed, and the purchase agreement prepared, the deal can
still fall apart.

Sellers have some control over how long the transaction may take, but it is
limited. Some sellers will impose deadlines on buyers to meet various steps of
the process. Unless those deadlines are realistic, buyers simply cannot or will
not comply. The best answer to how long it will take is at least three to five
months and probably much longer.

Michael D. Kreiter is
director at W.B. Grimes & Co., a Gaithersburg, Maryland-based investment
firm for the media industry.