Many buyers and sellers don’t realize the many points that can be negotiated in a deal. Knowing what to expect up front can help make the process move along. After price, here are the most heavily negotiated factors in a business transaction:
- Deal Structure: Sellers want mostly cash payment; Buyers want flexible payment terms.
- Closing Date: Sellers want to close ASAP; Buyers want months to do their due diligence.
- Contracts: Tired Sellers want to be done; Buyers want an employment contract assuring owner will stay at least for transition phase, OR, Energized Sellers want to start a new business, but Buyers want them to sign a “non-compete” contract.
- Working Capital: Seller’s working capital is not at a “normal” level, but Buyers want some “gas left in the tank.”
- Representations and Warrants: Sellers make legal/ethical statements in regard to their company; Buyers want assurance/proof that those statements are accurate and true.
The negotiation information listed above was gleaned from a Q12017 Market Pulse Survey by Pepperdine Private Capital Markets Project and Graziado School of Business.
Business brokers are ready to negotiate on your behalf. Call me when you’re ready to buy or sell. Gary Van Sistine, 920-621-3990