Sale Process & Timeline

Selling a title company is a complex process that typically takes 6-12 months from initial decision to close. Understanding each phase helps sellers prepare effectively and maintain realistic expectations.

Overview of the Process

Phase 1: Preparation (Months 1-2)

The preparation phase sets the foundation for a successful transaction. Rushing this phase often leads to problems later in the process.

Financial Preparation

• Compile financial statements: Gather 3-5 years of tax returns, P&Ls, and balance sheets
• Normalize earnings: Identify add-backs (owner comp, one-time expenses, personal items)
• Quality of earnings analysis: Larger transactions may warrant professional QofE
• Revenue breakdown: Analyze by channel, customer, geography, and product type

Operational Documentation

• Organization chart: Current team structure with roles and compensation
• Customer analysis: Top customers with revenue history and relationship owners
• Underwriter information: Current agreements, volumes, and claims history
• Technology inventory: Systems in use, contract terms, integration requirements
• Legal review: Corporate documents, contracts, pending litigation, compliance status

Valuation Assessment

• Develop preliminary valuation range based on market comparables
• Identify key value drivers and potential concerns
• Determine acceptable deal structure and terms
• Set realistic expectations for price and timeline

Phase 2: Marketing (Months 2-4)

The marketing phase involves identifying and engaging potential buyers while maintaining confidentiality.

Buyer Identification

• Strategic buyers: Other title companies seeking geographic or capability expansion
• Financial buyers: Private equity firms with title industry platforms or interest
• Individual buyers: Industry executives, entrepreneurs, or family offices
• Screening criteria: Financial capability, strategic fit, cultural alignment

Marketing Materials

• Teaser/blind profile: Anonymous summary to gauge initial interest
• Confidential information memorandum (CIM): Detailed overview for serious buyers
• Financial model: Projections demonstrating growth potential
• Virtual data room: Organized repository for due diligence documents

Buyer Engagement

• Confidentiality agreements: NDAs executed before sharing sensitive information
• Management presentations: Meetings with qualified, interested buyers
• Indications of interest: Initial, non-binding price and terms indications
• Letter of intent (LOI): More detailed, typically exclusive agreement to proceed

LOI Negotiation

Key terms typically addressed in the LOI include:

• Purchase price and structure (cash, earnout, seller financing)
• Treatment of assets and liabilities
• Exclusivity period for due diligence
• Key closing conditions
• Expected timeline
• Employee and transition arrangements

Phase 3: Due Diligence (Months 4-6)

Once an LOI is signed, the buyer conducts detailed due diligence to verify information and identify risks. This is often the most intensive phase for sellers.

Financial Due Diligence

• Detailed review of financial statements and tax returns
• Verification of revenue by customer, channel, and geography
• Analysis of expense structure and margin sustainability
• Working capital normalization and calculation
• Confirmation of add-backs and adjustments

Operational Due Diligence

• Review of underwriter agreements and relationships
• Customer reference calls and contract review
• Technology systems assessment
• Employee interviews and retention planning
• Facility and lease review

Legal Due Diligence

• Corporate document review and authority confirmation
• Contract review (customers, vendors, employees)
• Litigation and claims history
• Regulatory compliance verification
• Insurance coverage review

Common Due Diligence Issues

Be prepared to address these frequently raised concerns:

• Customer concentration or at-risk relationships
• Discrepancies between reported and verified financials
• Outstanding legal or regulatory matters
• Technology gaps or integration challenges
• Key employee retention concerns

Phase 4: Closing (Months 6-7)

The closing phase involves finalizing legal documents, satisfying closing conditions, and transferring ownership.

Definitive Agreement Negotiation

The purchase agreement addresses numerous detailed provisions:

• Representations and warranties: Seller statements about the business
• Indemnification: Allocation of risk for breaches and undisclosed liabilities
• Closing conditions: Requirements that must be met before closing
• Covenants: Promises about conduct between signing and closing
• Transition arrangements: Seller's post-closing role and obligations

Pre-Closing Activities

• Third-party consents (underwriters, landlords, customers if required)
• Regulatory approvals or notifications
• Employee communications and retention agreements
• Transition planning and integration preparation
• Final financial statements and working capital calculation

Closing Day

• Execution of all closing documents
• Wire transfer of funds
• Transfer of ownership and control
• Customer and employee announcements
• Transition period begins

Timeline Expectations