After the introduction of the topic of acquisition from the buyer to the seller, the first major milestone in an acquisition deal is usually a terms sheet. The

After the introduction of the topic of acquisition from the buyer to the seller, the first major milestone in an acquisition deal is usually a terms sheet. The terms sheet would be essentially a non-binding high-level agreement to the basic terms of the deal. Price is just one of many terms. It is clearly one of the important ones, but there are other sometimes equally important terms in a given deal, such as associated non-compete and consulting contracts. Also, "price" is a nebulous term and is usually not just one isolated number. For instance, there can be earn-outs, hold-backs, escrowed amounts, consulting fees, etc., and all of these can be tied to indemnities, conditions, etc. And the structure of the deal, e.g. stock vs asset, impacts the net take home to the shareholders, which is what most people are ultimately interested in. Both parties agree on the terms sheet through negotiation. That sounds obvious, but the point is there is not one set process. There are many strategies to negotiation and some make more sense than others in the context of a particular deal. It is not uncommon for parties to walk away and come back to the table at this stage, and in fact, at all stages. The "price" could easily move up or down significantly depending on a number of factors. It really comes down to what the seller is willing to sell for and what the buyer is willing to buy for. If there is an overlap, there could be a deal. If not, then no deal. The rest is jockeying for the overlap. Walking away until you get x is one tactic to get to the top of the overlap from your perspective. Finally, investment bankers and their equivalents in these situations are not necessary, but they can get you a higher price. Their basic usefulness is connecting you to potential buyers, i.e. through their roladex. You, alone, may not know or have access to these potential buyers. By engaging multiple buyers you can get an auction scenario, which is often ideal because usually buyers willing to pay more for something if they are taking it away from someone else in addition to getting it for themselves. However, certain tactics can turn off and ultimately dislodge particular buyers from the process, which could be net negative for the shareholders depending on which buyer(s) walked away. Also, brokers usually take a significant % fee, and if they do not get an auction going, this could just be wasted money.