M&A Offers and Contracts

Once several buyers have been obtained, it is time to start bringing offers in from the various parties in order to start the negotiation process. Negotiation on price, seller earn-out, recapitalization structure, sale type, closing terms and other terms are the most important part of the deal. Experience in negotiation, understanding value, and knowing what is "market" in M&A for their industry is important in formalizing a contract and getting the best deal possible. Especially when selling a business the highest price may not be the biggest strength in a particular offer.

This is also generally the time our clients start to meet their potential buyers. A strong feeling of trust and confidence between the buyer and the seller is crucial to a successful deal and potentially years of interaction following the sale. We encourage our clients to do as much due diligence on each of the buyers as possible including speaking with previous owners of their portfolio companies.

After a single Letter of Intent (LOI) has been chosen by our clients and has been signed by all parties, the parties are "in contract" and that is when most of the marketing efforts cease. LOI's can come in many forms ranging from very basic to full detail. A strong LOI ensures both parties understand almost everything about the deal and leaves little room for misunderstanding and deal failure during due diligence and negotiation of the purchase agreement.