Businessmen at the meeting table behind symbol of a thinking head

The alter­na­ti­ves in the transac­tion negotiations

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