M&A
Ten months standardizing governance, legal matters and numbers so the owner came to the negotiating table as a proactive seller.
3 partiesCompeting in the negotiation
OVERVIEW
CONTEXT
A partner offered to buy a majority stake. The business had no basis for knowing whether the price was high or low.
The business was performing well but depended almost entirely on its founder: supplier relationships, pricing for key accounts and even hiring decisions all went through one person. For a buyer, that was the biggest risk — and the main reason to push the price down.
The legal file had many unclear items: warehouse leases signed in a personal name, some assets not separated between the company and the family, and key distribution contracts without assignment clauses. Each of these became a deduction in the negotiation.
SOLUTION
Transferring supplier relationships and pricing authority to the executive team over nine months.
Moving contracts to the right legal entity and separating personal and company assets.
Two years of figures presented the way investors are used to reading them, reconciled with tax reports.
Defining which buyer gains what by owning this business, and pricing on that basis.
Approaching additional potential buyers so the deal wouldn't play out one-on-one.
Retention arrangements for key staff, agreed before news of the deal spread.
Most of the time went not into negotiating but into removing the issues that would have cut the price. The founder gradually stepped back from day-to-day operating decisions, and the executive team began meeting suppliers without him present.
The information pack went to a screened group of buyers on a shared timeline, so all parties responded within the same window. Due diligence ran on the prepared document set, and seller protections were included from the very first offer.
WHAT'S DIFFERENT
Most of a deal's value is decided in the months before it begins.
Every weakness was dealt with before the buyer could add it to the list of deductions.
Having several interested parties protects the price better than any negotiating technique.
Key-staff retention was agreed early, avoiding disruption once word got out.
Transition terms and the founder's role were discussed up front, leaving nothing hard for later.
RESULTS
I used to think selling a business was a negotiation. It turned out to be ten months of preparation, followed by a few weeks of negotiation.
Ideally two to three years before you intend to sell, or as soon as the business starts receiving its first acquisition enquiries.
Only a very small group knows the full picture. Each piece of governance work has its own legitimate reason and doesn't need to be linked to the deal.
Usually yes, for a transition period. Reducing dependence early makes that period shorter and the terms easier to negotiate.
A phased advisory fee for the preparation work, plus a component tied to the outcome of the deal. The scope of work is agreed in writing before starting.
A NEW JOURNEY STARTS HERE
A thirty-minute conversation is usually enough to name the bottleneck. The rest is designing a roadmap that fits your size and resources.
Talk about your business