Remember: It Is Not Always the Price

June 27, 2012 by Deal Studio Selling a Business 0 comments

The following are situations where the price was not the deciding issue in the successful sell of a business. The ultimate buyer may be the only one who really understands the situation. A business intermediary really understands the issues and can lead the buyer and seller to a successful resolution.

• One seller had 60 shareholders who needed to walk away from the deal. The losing buyer wanted all selling shareholders to be accountable for the “reps and warranties.” The winning buyer waived the reps and warranties at closing.

• A seller’s management team wanted some future upside in the deal. The losing buyer offered all cash and normal compensation. The winning buyer offered 80% cash, 20% stock plus 3-year earnout on revenues — including acquisitions.

• Time was of the essence. The losing buyer needed 30 day due diligence and negotiations plus a 60-day window to close the deal. The winning buyer offered to close within 40 days of the Letter of Intent and agreed to have limited due diligence.