2 ms·

A lawyer isn't the answer for everything. Get an investment banker who has M&A experience, or alternately management consultant who can argue with the acquirer

by wtn 16y ago

A lawyer isn't the answer for everything. Get an investment banker who has M&A experience, or alternately management consultant who can argue with the acquirer about the valuation.

davros 16y ago
I've done a deal like this. You need a team. First you need a consultant who specialises in this sort of transaction. Interview a bunch of them and be willing to pay a few percent of the proceeds as a success fee. You will also need a lawyer, a specialist tax accountant, personal accountant, etc. Right now you are at the non-binding offer stage. This is when you shape the deal and negotiate the overall price. Your aim is to not only maximise the sale price but also manage risk by maximising up front cash and minimising proceeds which are dependent on future performance (earn-out). Others have commented on this stage. My advice is to create a formal process - step back and spend a couple of months creating an 'information memorandum' and get it to a bunch of prospective buyers. The only way to get the best deal is to get multiple offers. Now here is the most important thing I have to say. Negotiating the deal is the easy bit. I repeat - the easy bit. You have to do due diligence and negotiate the long-form contracts. If you get this wrong, the deal rapidly become much less attractive. This is where both your sale consultant and lawyer are critical, but you'll have plenty of work to do too! Start thinking about due diligence right now. Will your business stand microscopic scrutiny? Do you meet all accounting standards, relevant business regulations, etc. The better the deal you negotiate, the harder you'll be pressed in due diligence. And remember you need to be 100% truthful because the contracts will contain clauses that you won't want invoked if you provide any incorrect information. The only really important advice you should take from an online forum is to hire great consultants now. Only deal with genuine experts who have real experience with similar transactions. Be prepared to pay high fees, the right people will be worth it!
jacquesm 16y ago
A lawyer you can typically hire on an hourly basis, and on reasonably short notice, an investment banker will likely want to become a part of the deal. A (good) lawyer will likely also have a considerable network of contacts one of which might be suitable as a lead negotiator. > Get an investment banker who has M&A experience That's a possibility but a far more complicated one and it will take quite a bit of time to find a decent one. But it would be a good choice if they have a good rep and can be easily found, my personal experience with investment bankers is an extremely mixed bag. > alternately management consultant who can argue with the acquirer about the valuation. That would be useful anyway, but there will be time enough for that, after all if a deal this size goes through there will be up to a month of hammering out the details of the deal as well as due diligence. If they're 'in the ballpark' then you could simply respond with a counter off offer a bit higher than what is acceptable to you to build in some room. Then use your own cut off value to guide a walk-away decision.

by wtn 16y ago

A lawyer isn't the answer for everything. Get an investment banker who has M&A experience, or alternately management consultant who can argue with the acquirer about the valuation.

davros 16y ago

I've done a deal like this. You need a team. First you need a consultant who specialises in this sort of transaction. Interview a bunch of them and be willing to pay a few percent of the proceeds as a success fee. You will also need a lawyer, a specialist tax accountant, personal accountant, etc. Right now you are at the non-binding offer stage. This is when you shape the deal and negotiate the overall price. Your aim is to not only maximise the sale price but also manage risk by maximising up front cash and minimising proceeds which are dependent on future performance (earn-out). Others have commented on this stage. My advice is to create a formal process - step back and spend a couple of months creating an 'information memorandum' and get it to a bunch of prospective buyers. The only way to get the best deal is to get multiple offers. Now here is the most important thing I have to say. Negotiating the deal is the easy bit. I repeat - the easy bit. You have to do due diligence and negotiate the long-form contracts. If you get this wrong, the deal rapidly become much less attractive. This is where both your sale consultant and lawyer are critical, but you'll have plenty of work to do too! Start thinking about due diligence right now. Will your business stand microscopic scrutiny? Do you meet all accounting standards, relevant business regulations, etc. The better the deal you negotiate, the harder you'll be pressed in due diligence. And remember you need to be 100% truthful because the contracts will contain clauses that you won't want invoked if you provide any incorrect information. The only really important advice you should take from an online forum is to hire great consultants now. Only deal with genuine experts who have real experience with similar transactions. Be prepared to pay high fees, the right people will be worth it!

jacquesm 16y ago

A lawyer you can typically hire on an hourly basis, and on reasonably short notice, an investment banker will likely want to become a part of the deal. A (good) lawyer will likely also have a considerable network of contacts one of which might be suitable as a lead negotiator. > Get an investment banker who has M&A experience That's a possibility but a far more complicated one and it will take quite a bit of time to find a decent one. But it would be a good choice if they have a good rep and can be easily found, my personal experience with investment bankers is an extremely mixed bag. > alternately management consultant who can argue with the acquirer about the valuation. That would be useful anyway, but there will be time enough for that, after all if a deal this size goes through there will be up to a month of hammering out the details of the deal as well as due diligence. If they're 'in the ballpark' then you could simply respond with a counter off offer a bit higher than what is acceptable to you to build in some room. Then use your own cut off value to guide a walk-away decision.