In transaction negotiations, it is in the nature of things that each party involved wants to achieve the best possible result for itself or the client. In practice, it turns out that one party can rarely achieve 100% of its own ideas at the negotiating table. Good preparation is therefore essential.
At Corporate transactions wird in fast allen Prozessabschnitten verhandelt. Bereits in einer sehr frühen Phase geht es oft um Kleinigkeiten in der Vertraulichkeitserklärung. Erst in der Folge wird ein Unternehmensexposé versendet. Der größte Berg liegt dabei regelmäßig bei der Verhandlung der Kaufvertragparameter vor den Parteien. Viele Punkte müssen rechts- und zukunftssicher für alle Beteiligten fixiert werden – Kaufpreis, Auszahlungsmodalitäten, Garantien, etc. Eine anstrengende, stressige und zeitaufwendige Phase für alle.
No preparation has fatal consequences
Those who go into these rounds unprepared will consequently make more compromises than necessary. Especially since (hopefully) experienced advisors with a high degree of professionalism are sitting at the table in the negotiations. In principle, each negotiating side should assume that the other side is well prepared. No or poor preparation consequently means many compromises: Because the chain of arguments of the prepared side will often be weightier and more conclusive. In such situations, emotional tensions often arise: The transferring entrepreneur feels caught off guard.
How do you prepare transaction negotiations?
The question of optimal preparation cannot be answered in a general way: because all transaction negotiations are different and unique in their roots. However, there are a few basic principles to be observed.
Anyone who wants to sell their business should first be clear about their real goals. In the first conversation, the goal of the highest possible purchase price is often mentioned. Instead, the actual goals of the entrepreneur often crystallise in the further process. This can be the appreciation of the life’s work, the concern for preserving the jobs created or other goals that are not obvious at first.
Once the goals have been set, the next step is to work out possible alternatives. Because the reappraisal can go in many directions. A restriction in the way of thinking does not make sense. The entrepreneur should have the freedom to consider all possibilities.
Alternatives and options
The most obvious alternative search is the indicative offers of the prospective buyers. Once the entrepreneur has worked out his favourite, he can possibly fall back on the offers of other prospective buyers. This is a comfortable situation that is not always the case.
But the choice of offers is only a small part of the possibilities. The seller must ask himself what will happen to him and the company if there is no sale. Can a salaried managing director perhaps continue to run the company? Is there perhaps the possibility of a management buy-out within the company? Is it possible to sell only parts of the company in a carve-out or asset deal?
These are only a few of the questions to be answered in the context of good preparation of a transaction. It is worth the effort because, after all, the entrepreneur’s life’s work is often at stake.
Tips for further reading:
Business sale vs. real estate sale
Advice traps in the process of business succession
The costs of a business succession or an M&A project
How do you recognise a reputable business sale advisor?
Selling a company in the IT industry
Company successions in East Westphalia and Bielefeld are on the rise
Critical succession situation in NRW
The 5 most important contents of an entrepreneurial emergency kit