FROM CONCEPTION TO CLOSING: THE EXIT PROCESS

When I started StaffLink Outsourcing, Inc., I envisioned building and operating a small business that would provide value to a group of business owners who appreciated concierge service and that would, hopefully, provide a reasonably nice lifestyle to my team and to me. When the business began, I was struggling to find clients that were the right fit, all while building my processes and team, one brick at a time. Needless-to-say, the concept of an exit seemed completely foreign and was not even remotely on my radar.

Every business owner has their own unique set of circumstances that drives them toward a business exit. For some, the exit is a form of succession planning. For others, they would like to get additional capital and support to fuel the growth of the business. Whatever the reason, mergers and acquisitions are becoming an ever more present part of industry and the growth trend is astonishing. According to Reuters, the total value of deals in 2024 totaled over $3.4 Trillion, which is up 15% from 2023. In the United States, M&A transactions were up 10% year over year (Allurius Briefing, M&A Report 2024-Q4, February 2025). Moreover, during 2025, the global M&A activity continues to build momentum despite economic and political uncertainty (Boston Consulting Group, The Brave New World of Dealmaking, online version, 2025). While large deals are still on the low end of the activity level, private equity and venture capital deal activity is trending higher and deal values are also on the rise. Indeed, PE firms are sitting on $2 Trillion of undeployed capital (Boston Consulting Group), so there is a compelling drive to find good investment opportunities. With these metrics, and with the success of the PEO Industry, it seems that the potential for additional M&A activity will continue, which means that there is tremendous opportunity for those who seek it.

As with so many others, as I grew the business, I began to contemplate how I could continue to scale the company, to grow my team and what the future could look like. I loved the PEO industry and had all intentions of being part of it for the foreseeable future, but I wondered if I could achieve more as part of something bigger: Perhaps I could best leverage the company by partnering with another company that shares my values and culture, but has more resources that could be deployed for growth and service!

For me, the exit process from conception to closing was not a straight line and it was not fast. In fact, making the decision to merge with another company took over ten years and multiple conversations with potential acquirers. None of those early discussions evolved into a transaction, but they were incredibly informative to me by helping to sort through the things that were important and what transaction would make sense.

What developed was a set of five core criteria that were my primary deal points and by which I evaluated every opportunity that evolved. However, in those early years, it was also clear to me that I was not mentally ready to merge my business with another company.

Eventually, all of the factors that were important to me came together and I became more open to the idea of merging my business into another, and that is when the work and the excitement really started.

While there are different variations that define the M&A process, they all seem to filter to five basic stages. The stages are:

1. ASSESSMENT AND PRELIMINARY REVIEW:

This part of the process can occur over periods of years. As I said previously, it took me over ten years to get to the point in which I was truly ready to participate in a transaction.

The critical part of this is for the prospective seller to decide their “why.” What goals are they trying to accomplish in a transaction. Getting very clear on the “why” will help to identify the target companies with whom they would like to engage. That exact same process applies to the prospective buyer, as well.

Once all of that is determined, the process of organizing the data and developing valuation models can start.

2. NEGOTIATION AND LETTER OF INTENT:

Once the prospective seller organizes their data and gets a range of valuation, they would send some basic financial, operating and tax information to the prospective buyers to allow them to craft a Letter of Intent or an Indication of Interest. Once received, the LOI is evaluated and negotiating the terms can proceed.

3. DUE DILIGENCE:

After selecting the buyer with whom one wishes to partner, the due diligence period begins, which typically pauses negotiations with other potential suitors. To get the process started, a data room is established to house voluminous amounts of data about all aspects of the business. This allows the buyer to evaluate the quality of the earnings of the seller to verify the valuation that was agreed upon in the Letter of Intent or Indication of Interest.

Part of the due diligence period often includes sight visits for both the seller and the buyer so that each can evaluate the culture, facilities and operations of the other.

Once the due diligence period is concluded, the valuation can be confirmed or the parties can renegotiate the terms based upon information discovered during due diligence.

4. NEGOTIATIONS AND CLOSING:

As negotiations continue, the closing documents are drafted, which would include a purchase agreement and supplemental agreements. When all of the terms have been agreed upon and documented, the transaction will go to closing.

5. POST-CLOSURE AND INTEGRATION / IMPLEMENTATION:

The integration plan should really be part of the discussion during the entire process and none of it should come as a surprise. However, once the deal is closed the process begins. The Integration will involve the combining of all aspects of the operations of the seller and buyer but perhaps more importantly, also involves the integration of the two cultures of the business (PwC, Mergers & Acquisitions: The 5 Stages of an M&A Transaction, see also (Ansarda, Overview of the M&A Process, May 19, 2025).

The timeline required to complete a deal varies widely based upon the amount of data that the seller has completed; the extend of the due diligence process and the resources available to both parties to draft the documentation for the transaction. However, for smaller deals, the process can be from a few months to six months.

It is very easy to focus exclusively on the financial aspects of a transaction once you have made the decision to move forward. However, as so many have said; When you see one transaction, you have seen one transaction. Every deal is different and every deal has multiple layers, all of which are important to the ultimate success of the transaction.

My experience is that it is important to be crystal clear on what your goals and objectives are in completing a transaction. Evaluate every element of the transaction with a clear eye and make sure that you are comfortable.

In every deal, there will be points that you will need to concede in order to move forward; that is understandable because the deal has to make sense to both sides. However, it is important to evaluate the transaction at every step of the process to make sure that the deal still makes sense and fulfills the goals and objectives that were identified at the outset.

Deal structure matters! The amount of equity that you are selling, the amount of equity that you plan to roll over, holdbacks and the timeline for payments and how all of those factors are structured and drafted are important considerations.

Another consideration is whether one’s goal is to completely exit and sell all of their shares or to stay involved in the business for future liquidity events. If one is to stay involved as an executive in the company, it is important to identify in advance a role for you in the newly constructed business and to ensure that one is happy in that role. Getting clarity around all of these points will go a long way to ensuring that the transaction will be good for all parties.

A successful business exit is considered the pinnacle of success for many entrepreneurs. Only a fraction of the businesses started ever get to the point in which a liquidity event is even a consideration. So, of course, contemplating an exit is an extremely exciting but also frightening proposition. But when approached with clarity of purpose, discipline and attention to detail, the process can be extremely educational, fulfilling and rewarding, both professionally and financially!