The average length of time it takes for private equity firms to close deals has soared this year as many investment funds have turned the traditional auction process on its head by putting up offers before determining if the target is a company they really want to buy.
Some buyers facing steep competition at auction are delaying as much presigning due diligence as possible in an effort to reduce costs when the odds of coming out on top remain slim, lawyers and bankers say.
“To some extent, the whole process is elongated because it is a seller’s market,” said Howard Berkower, a partner with the corporate practice at McCarter & English LLP. “With prices very, very lofty, successful bidders may want to take their sweet time to march to the finish line to justify the price.”