EVERYTHING
Many times, when a seller looks to sell their company to a third party, they naturally think about negotiating the deal. But too often the definition of negotiating begins and ends with the purchase price, or valuation the acquirer places on your company.
But in reality the sale price or valuation is just the starting point for what you can negotiate to move you toward your euphoric outcome. Here are other negotiable items that can make a meaningful difference to what you’re receiving for your business.
- Structure of the transaction. Negotiate for a Stock transaction as these are often more favorable to the seller due to tax benefits versus an Asset transaction.
- Working capital adjustment – these are a common negotiated item during a transaction and can be meaningful to the net proceeds the seller receives.
- Holdbacks – this is a common negotiated item and will impact the timing and the potential dollar amount the seller receives.
- Percentage of cash at close versus payments over time – the timing of receiving payment for the business may impact the seller tax payments and the time value of money.
- Owner salary amount to stay on board or to work through a transition period. Include negotiating a bonus during the same period.
- Continuation of health benefits for the seller and family.
- Continuation of desired perks that the seller has enjoyed historically.
- Continued use or access to the company products and services if desired by the seller.
This gives you a flavor of deal points that are open for negotiation in most transactions. Thinking beyond just the overall dollar valuation amount can have you increasing the total reward you’re receiving for all your years of hard work.
