Negotiation

Effective strategies for negotiating a deal.

A letter of intent (LOI) is far more than a legal document. It’s a key milestone in the M&A process and can be a powerful tool for getting the deal done. The LOI outlines the basic parameters for an acquisition including the period of exclusivity, purchase price and consideration, preferred deal structure, and expiration date. […]

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One of the most challenging aspects of “not-for-sale” deal making is that more often than not owners initially are not interested in selling. Owners say “no” all the time and it can be discouraging, especially to first-time buyers who are unfamiliar with the M&A process. Here are three steps a buyer should take after hearing […]

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Don’t rush to get a signed letter of intent (LOI) by kicking the can down the road on price. A signed LOI is a significant milestone in the M&A process, indicating mutual interest in an acquisition. The document covers the basic parameters of the deal that both buyer and seller agree to including what will […]

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When negotiating for an acquisition, we always recommend you, as the buyer, try to match the seller’s negotiation team. Many owners are selling their company for the first time and in most cases their company will be smaller than yours. Arriving to the negotiation table with a swarm of lawyers can be overwhelming and may […]

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We had been in negotiations with the seller, Martin, and his team all day and despite diverging perspectives on a few issues we had managed to nail down several important aspects of the agreement involving intellectual property and key employee contracts. The next afternoon when we resumed negotiations, Martin brought up the employee contracts again […]

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During negotiations, a third-party M&A advisor acts as a buffer between buyer and seller. As you can imagine, negotiations can become quite intense and emotional on both sides and we want to do everything in our power to preserve a harmonious relationship between both parties. Having a good working relationship with the seller is important, […]

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When it comes to negotiation, we often hear about “win-win situations” where both sides benefit from the deal no matter what. While I understand the need to come to a consensus in order to move a deal forward, we’re not big fans of negotiation for a “win-win” because it implies you are also negotiating for […]

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Price is often the number one focus in mergers and acquisitions and everyone is eager to get down to the numbers. However, as you might expect, buyers and sellers have very different expectations on price, which can lead to friction between the two parties. On the one hand, most sellers plan to offer their business […]

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After signing a letter of intent, you expect the deal to close, but there are a number of reasons acquisitions fail ranging from regulatory hurdles to unexpected challenges that arise during due diligence to cultural clashes. In my last post, I discussed reasons deals fall apart even after both parties sign a LOI. Here are […]

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For an owner of a privately-held company, the business is their baby and using hard-nosed tactics to negotiate for the lowest price is ill-advised. The human factor cannot be overlooked when pursuing M&A and establishing trust with an owner is critical. Buying a privately-held business is not like buying a car where you can negotiate the […]

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  Q: When a company has two owners that are equally involved is it advisable to ask them to choose only one negotiator, especially at the final stages? A: Negotiating with one owner of a company and convincing them to sell their business can already be challenging. The situation becomes more complex when the company you wish to […]

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SABMiller has agreed to Anheuser-Busch InBev’s $106 billion offer to acquire it. Together, they will form a global beer conglomerate with $64 billion in annual revenues that is estimated to make up 29% of global beer sales. The new company would be three times bigger than its next competitor, Heineken. Given that this is such […]

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Q: Who is the internal champion on the M&A team? What is their role? A: The internal champion is an important member of your M&A team. Your acquisition team should include people from your own company such as the CEO, CFO, the internal champion, and functional leaders, and external experts such as lawyers, accountants, valuation experts, due diligence experts […]

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Time your negotiations by understanding owner psychology. Everyone wants to talk about price in mergers and acquisitions. It’s often the number one focus of buyers and sellers…but for opposite reasons. Both are likely to say they are looking for a “good deal,” but this can have a completely different meaning depending on the perspective. Buyers […]

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Pursuing M&A is a passionate process. Emotions run the gambit from excitement in finding a new deal to anxiety about risks uncovered during the acquisition. I’ve found due diligence and negotiations to be among the most stressful times during mergers and acquisitions. Here are six ways to help everyone keep their cool during these critical […]

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A collaborative mindset often leads to the best long-term outcome when you’re looking to buy another company. Buying a company is not like buying a used car where you walk away and never see the dealer again. It can be more like buying an automobile with the seller thrown in. Imagine yourself at a dealership […]

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