M&A pipeline stages are configured once, by somebody enthusiastic, and the enthusiasm is the problem: every extra stage describes a real distinction and is individually defensible. Twenty stages later nobody can pick one without rereading the definitions, so everybody picks the same three and the pipeline stops describing anything. Nine work. This page sets out the nine and the test each has to pass.
The nine
Pitched, mandated, materials, in market, IOIs in, management meetings, LOI signed, diligence, closed. Dead is a state rather than a stage and should be recorded alongside with a reason. Nine covers a full sell-side process and every one of them is a fact rather than a judgement.
The test: can an analyst pick it without thinking?
An NDA is back or it is not. Materials are out or they are not. If picking a stage requires rereading the definitions, there are too many, and what happens next is that everybody defaults to the safest-sounding option. A pipeline with 70% of records in one stage is a symptom, not a distribution.
The mandate and the buyer need separate stages
One process is at a stage; each buyer on it is at another. Collapsing them forces the analyst to choose which truth to record and makes the other question a phone call. This is the most common structural reason a pipeline stops being trusted by the people who maintain it.
How to cut a bloated one back
Pull twelve months of records and count how many ever sat in each stage. Stages with almost no traffic are being skipped or avoided, and both mean they can go. Merge them into their neighbours, announce it once, and expect accuracy to improve within a month.
Questions people ask about m&a pipeline stages
How many pipeline stages should we have?
Nine for a full sell-side process. Beyond about ten, analysts default to the safest-sounding option and the pipeline stops describing anything.
Should dead be a stage?
No, a state, recorded with a reason. A dead process still belongs in the history and the reason is what makes it reusable.
How do we know we have too many?
Count how many records ever sat in each stage over a year. Stages with almost no traffic are being skipped or avoided.