Keys to Negotiating a Successful M&A Deal

Keys to Negotiating a Successful M&A Deal  Whether you’re buying or selling a business, a few guidelines can help you negotiate a deal more effectively and improve your chances for an advantageous outcome. While you’re probably already familiar with basic negotiation strategies, most parties to an M&A transaction can use a refresher course when it comes to what may be the biggest deal of their lives.

Know Yourself

Good negotiators start by knowing themselves. Before you enter into sale negotiations, take time to identify your goals and your tactics for achieving them. If you’re buying, what’s your “reservation price”-the most you’re willing to pay? Would you be able to walk away from the deal if the seller refuses to budge on price?

If you’re selling, similar questions apply:

  • What’s the lowest offer you’ll accept?
  • Are you in a hurry to sell?
  • What conditions will you require as part of the sale?

For example, the retention of certain employees may be a priority. Also be prepared to speak confidently about your business’ strengths and address any perceived weaknesses. Since the buyer’s negotiating leverage emphasizes your weaknesses, you need to be aware of them and ready to provide a solution that mitigates an adverse effect on the buyer’s offering price.

Know the Other Party

Knowing the other side is as important as understanding your own priorities. This knowledge allows you to map out the negotiation ahead of time. As a buyer, you should have a thorough understanding of the business-gained through extensive due diligence.

If you’re a seller, it’s essential to know that your buyer can afford to purchase the business and, if the deal will be seller-financed, how well the company will be run while the note is being paid off. It’s also helpful to learn if your buyer has looked at many other businesses. Buyers who know they have other options if your deal falls through will probably drive a harder bargain.

Gathering knowledge involves more than research; you also need to be a good listener.

If you’re talkative by nature, make an effort to speak less and listen more when meeting with the other party. The better you understand them, the greater chance you have of anticipating their moves and preparing counter offers.

Build a Relationship

There are plenty of opportunities for differences of opinion in any business transaction, and a business sale is no different. Establishing a cordial relationship can go a long way toward reducing misunderstandings or unintended offenses. Social occasions such as dinner or a golf outing can break the ice. Expressing interest in the other party’s opinion and a sense of humor also can help build a good working relationship.

Going back on your word, exaggerating points or misrepresenting facts in an attempt to strengthen your position, on the other hand, can damage goodwill. Finally, don’t try to box the other party into an untenable position-it’s a tactic that’s likely to misfire.

Flexible is Vital

Selling a business is a complicated process, of which price is only one component. When entering the negotiation stage, keep in mind other items that are subject to bargaining:

  • Down payment amount;
  • Interest rate on a seller loan;
  • Collateral;
  • Seller warranties;
  • Earn-out provisions;
  • Non-compete agreements.

Also consider the structure of the deal-whether the company’s stock is being acquired, or just its assets. In general, sellers prefer a stock sale and buyers prefer an asset transaction, which provides better cash flow after the deal.

Good negotiators take advantage of the multifaceted nature of the process by remaining flexible throughout. This may mean compromising on some elements to get the ones that are most important to you, such as those related to financing terms, the closing date, employee retention or seller warranties.

With so many moving parts to consider, flexibility can get you past obstacles. If you’re hung up on a tough issue-say, the price of a particular asset-try putting it aside temporarily, moving to less controversial points such as the price of other assets, and then circling back later.

The VR Transaction Process: 20 Steps To A Successful Sale – Part 1

With over 30 years of experience in selling small to medium enterprises (SME), VR has developed a dynamic and effective Transaction Process to promote a win/win outcome for both Buyer and Seller.  Over the next two blog entries, we shall be sharing with you the 20 Step VR Process to Selling your business.  Here are the first 10 Steps to a successful sale:

1.     Initial Meeting:

The initial meeting serves as an introduction to VR and explanation on how VR can help maximize the value of your business and answer any questions. During this meeting your VR Intermediary will ask to review your business tax returns, company financials, brochures and sales materials, and any other pertinent information to understand your company.

Read the full article here.

December 12, 2012 Market Update

Well today is 12/12/12 and other than the fact it won’t happen again for 100 years (on which the date will be 12/12/2112 for Rush fans out there) I really don’t understand the significance but I digress.

A slow but positive morning as Europe is up on some great employment numbers out of the UK. Unemployment declined by 82000 in Q3 which is the biggest drop in over 11 years! Markets are showing a quarter point increase at midday.

In the US the FOMC concludes the two day meetings today and it would seem that we may see some further stimulus as the bond market is telling all that inflation is not an issue at present. That has the futures up about a quarter point in early trading.

Gold is trading higher by $8.00 back up through $1715 this morning and oil is up a half a point to $86.28.

As we get closer to the holidays we are seeing volumes decline somewhat but the current trend remains positive.

Lastly this morning some information for all around the holiday season:

– last trading day in Canada for settlement this year (tax loss selling) is Monday December 24th, 2012.

– last trading day in the US for settlement this year is Wednesday December 26th, 2012.

– Markets are open for the full day Monday December 24th, 2012.

– The Canadian markets are closed Tuesday and Wednesday December 25th and 26th and reopen Thursday December 27th.

– The US markets are closed on Tuesday December 25th and reopen Wednesday December 26th (as it is a statutory holiday in Canada our offices will be closed December 26th).

– Markets in both Canada and the US are open for the full day Monday December 31st, closed New Year’s Day and reopen Wednesday January 2nd, 2013.

 

VR Waukesha, Wisconsin Closes Two Transactions Valued at 7.7M

VR Business Sales | Mergers & Acquisitions, the leading business brokerage and mergers and acquisitions company in the world announced  today that the VR office located in Waukesha, WI has completed facilitating two unrelated transactions worth over $7.7M of market value.
The first transaction, valued at $3.7M was concerning a metal fabrication company and involved a recapitalization. The second larger transaction came about rapidly after a Private  Equity Group took interest in a manufacturer of Skid Steer Attachments and negotiations settled on a $4.4M price tag.

The VR Advantage | Buying a Business With VR

 

VR’s International Network of Professional Business Intermediaries offers over thirty years of successful experience to the buyer of a small or mid-size business around the world.

Our tradition of bringing qualified buyers and committed sellers together is the cornerstone of the VR organization.

VR boasts as being the only network of business intermediary’s that requires a fulltime commitment on behalf of its franchisees and associates.

VR has never allowed part-time offices and part-time associates to represent our clients, and makes the promise that it never will in the future.

Our responsibility and obligation to the general public is taken seriously, therefore, we do not allow part-time, work-at-home individuals help find the correct qualified business opportunity for you.

Our Intermediary’s are continually trained on market trends and conditions, financing options and techniques, and transaction structures, which allow the VR network to better serve its acquiring clients. Every highly trained and experienced VR Business Intermediary is dedicated to your needs, and eager to share their knowledge and expertise with you.

Choosing VR gives you the ability to search for qualified business opportunities on a local, regional, national, and international basis.

VR will aid you with your financing requirements, help package the transaction for the lender approval, and give you access to our national banking relationships. No transaction is too small or too large for VR to lend its expertise.

Call VR for more information at 1.800.377.8722

 

More Business Sales Transactions by VR Business Brokers

NEW BUSINESS TRANSACTIONS!

VR Continues to Match Qualified Buyers with Businesses for Sale

In today’s business climate, our clients demand quality and professionalism. We applaud our VR network for the recent successful transactions:High-Volume Ice Cream Franchise, $438,000Pasadena, CA

Landscaping Business, $280,000Asheville, NC

Landscaping Company, $185,000Dallas/Legacy Park, TX

Upscale Salon & Spa, $175,000 Coral Gables, FL

Beer & Wine Market, $55,000Artesia, CA

To learn how you can become a successful owner of a business, contact a VR office today!

 

 

SUCCESSFUL TRANSACTIONS

CNC Machine Company

VR Business Sales of New Haven, Connecticut, a leader in the sale of privately-held companies, recently facilitated the strategic sale of a cnc machine company for $1.07 million.

The transaction, which closed last month, was handled by William Hall, a business intermediary specialist.

SUCCESSFUL TRANSACTIONS

Web-Based Liquidation Company

VR Mergers & Acquisitions, located in Atlanta, Georgia, the leading business intermediary firm in the area, has recently facilitated the strategic sale of a web-based liquidation company for $350,000.

Gary Martin, a VR business intermediary, represented the seller throughout the transaction that was completed this month.

NEW ENGAGEMENTS

Casual Furniture & Accessories Company

VR Mergers & Acquisitions, located in Charlotte, North Carolina, announced it has been engaged by an owner of a casual furniture & accessories company to assist in facilitating the sale of their businesses.

This company is a multi-location furniture retailer. They offer a well-branded concept with over 25 years in business, offering unique products for the home. They have direct pricing with their vendors and well-established locations in strong markets. Go to their VR Web Site for further details.

NEW ENGAGEMENTS

Child Care Center

VR Business Brokers, located in Lakeland, Florida, the leading business intermediary firm in the area, has recently been engaged to assist in facilitating the strategic sale of a child care center.

This long-established learning center has been a landmark for the area. The sale includes the location’s real estate, which consists of two buildings on double and single lots. Click here for more details.

For information on owning your own VR Business Sales Franchise contact VR Franchise Information Request

or call (800) 377-8722

See more updates on the VR Business Franchise Opportunity Facebook page

 

 

More Successful Transaction By VR Business Brokers

SUCCESSFUL BUSINESS TRANSACTIONS

Ground-Route Transportation Business

VR Business Sales of New Haven, Connecticut, a leader in the sale of privately-held companies, recently facilitated the strategic sale of a ground-route transportation business for $628,000.

The transaction, which closed last month, was handled by William Hall, a business intermediary specialist.

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Eco-Friendly Dry-Cleaning Plant

VR Business Sales of Greensboro, North Carolina, a leader in the sale of privately-held companies, recently facilitated the strategic sale of an eco-friendly dry-cleaning plant for $192,500.

The transaction, which closed last month, was handled by Ben Haines, a business intermediary specialist.

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NEW BUSINESS ENGAGEMENTS

Two Independent Compounding Pharmacies

VR Mergers & Acquisitions, located in West Palm Beach, Florida, announced it has been engaged by an owner of two independent compounding pharmacies to assist in facilitating the sale of their businesses.

These two full service pharmacies do both retail of over-the-counter and prescription medication as well as medical equipment such as wheel chairs, hospital beds and CPM machines. Go to the VR Web Site for further details.

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Pizzeria and Sports Bar

VR Business Brokers, located in Bensalem, Pennsylvania, the leading business intermediary firm in the area, has recently been engaged to assist in facilitating the strategic sale of a pizzeria and sports bar in Philadelphia.

This business is located in a busy neighborhood where the locals like to come for a good time. Great opportunity to enjoy the success of this restaurant. All inventory and equipment, as well as liquor license, come with the sale. Click here for more details.

ADDITIONAL ENGAGEMENTS

Superior Printing Company, FL: $1,225,000
Auto Salvage Yard, KS: $409,000
Liquor Store, CA: $235,000
Full-Service Day Spa, SC: $170,000
Upscale Print Shop, ON: $120,000

VR is celebrating over 30 years as the world’s only network of full-time professional business intermediaries that addresses the needs of small and mid-sized businesses.

VR has sold more businesses in the world than anyone®.

VR Business Franchise locations are available throughout U.S., Canada, and Europe.

Now is a Great Time to Become Part of VR Franchise Opportunity.

View our VR Presentation Videos & PDFs  for more information on becoming part of the successful network of VR Business Sales offices,

or call our Director of Franchise Development at 800-377-8722  or 954-565-1555