Having represented M&A Buyers and Sellers for years, I realize there is some confusion around the timeline of an acquisition.

Let me lay out the broad timeline of an M&A transaction and the key issues at each stage (this is a high-level overview, so DM me with specific questions):

I. Pre-Transaction: Search Phase
This is the period when trying to find your target. You will look online, and speak to brokers, friends, family, and college friends. If you are so inclined, faith-based communities (synagogues, churches, mosques) are great places. At this stage, you will make contact with your team (lawyer, banker, QofE, etc.). If you are in this phase, reach out and I will connect you with good people.

Note: if you are a Traditional Search Funder, you will have already connected with your lawyer, and put together fund documents prior to this phase.

I. LOI Phase
This phase begins after identifying a target. After performing your analysis of the business and running it by your team (mentors, investors, lawyer, etc.), you are ready to submit an LOI. You will want to reach out to an M&A lawyer (like me) to review your LOI (help you draft it, depending on your proficiency). Some buyers draft and submit their own LOIs, I suggest having your M&A lawyer and lender review the LOI prior to submitting. I’ll do a deep dive into the LOI strategy in another post.
Importantly, for the timeline, this is when you get exclusivity. Part of the LOI (and one of the few binding provisions) is the Seller agreeing they will not market the business. Exclusivity is usually about###-###-#### days.
There is no need to form an entity at this stage.

Purchase Agreement/Diligence Phase:
Once your LOI is signed, crack a small bottle of champagne and start diving into your diligence (financial/QoE, legal, operational, site visits, management meetings, etc.). Your lawyer will kick into gear to negotiate the purchase agreement and other agreements (seller note, consulting agreements, entity formation documents, etc.) in parallel with the diligence (some wait until after QoE is done for legal to start). If taking LP investors, some start these discussions now and your lawyer will often start by sending a term sheet to those investors to eventually draft an operating agreement or shareholders’ agreement.

Now, there are two options: simultaneous sign and close, or non-simultaneous sign and close. Simultaneous means you sign the purchase agreement and close (complete the acquisition) at the same time. Non-simultaneous means the parties sign the purchase agreement, and then close the transaction###-###-#### days later.

I prefer non-simultaneous, and if the buyer has a lender, investors, consents, or wants to talk to employees it is better to have non-simultaneous.
The purchase agreement should contain its own exclusivity, which replaces your LOI's exclusivity with an exclusivity period, which lasts until closing.
Once the purchase agreement is signed, it will set out certain conditions that have to be completed in order to close. The primary condition is usually lender’s approval, but conditions can be anything from offer letters, and consents of customers/landlord, to antitrust approval on larger deals. At closing, the parties will sign all the documents, wires will be initiated (usually this is done by email or a phone call), and you will be the proud new owner of a business.
Post-Closing: After getting a good night's sleep and celebrating with a closing dinner, the real work begins. Note, any diligence items you identified should find their way into your post-closing to-do list.

Let me know of any specific questions or if you want a deeper dive into any of the phases.