Business negotiations when selling a business

If you are thinking of selling your business, it is important to arrange and participate in business negotiations with the acquiring party beforehand. This has always been the custom during mergers and acquisitions since time in memorial. However, these negotiations are not held just for show. There are very important details that should be discussed and agreed upon leading up to the sale. Below, see what these details are and why they are important.

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Size of equity being sold
One of the things that should be discussed is the equity portion of the company being sold. This could range anywhere from 1% to 100%. You as the business owner will determine what stake you're willing to let go off depending on how much control you want to retain in the company as well as how much capital you want to raise. If the offer on the table is an acquisition, however, the takeover bid will be that of 100% of your company.

Value and valuation of the business
Another crucial detail that needs to be discussed during business negotiations at this stage is valuation. This is actually the bulk of negotiations in many M&As. Both parties will have to agree on the valuation of the entire company. If a decision cannot be reached at, a private valuation firm can be contracted to make an assessment. However, as the business owner, you still have leeway to negotiate the final amount as well as any exit packages for staff and shareholders.

Retention of current staff
Another ethical point of discussion during the sale of a business is the question of employment security for current staff. It has been the norm for business owners to try and safeguard the positions of their loyal employees by asking that they be retained in the business, at least for a considerable period after the event. You could negotiate to have junior or senior staff retained or a percentage minimum of all your employees.

The direction and vision of the company after the sale
You should also engage the acquiring party on their plan for the business after the acquisition or merger. That is, what is their vision for the company? In what direction do they want to take the company? This is an important part of business negotiations because it allows you to gauge if the other party has the same vision as you. At the end of the day, you want your company to go in a certain direction, whether or not you are in control of it.

Your role in the future of the company
Another important detail that should be in the negotiations is your role in the company after the acquisition. Will you still be at the head, will you be consulting or will you have any role at all? Some people like to negotiate that they be retained in an executive role to help steer the company forward or at the very least to help it navigate through the transition. The prerogative is yours on this.

The result of these business negotiations will determine if the business sale will proceed or not. It will also determine how long till the sale can be completed.

If you are thinking of selling your business, it is important to arrange and participate in business negotiations with the acquiring party beforehand. This has always been the custom during mergers and acquisitions since time in memorial. However, these negotiations are not held just for show. There are very important details that should be discussed and agreed upon leading up to the sale. Below, see what these details are and why they are important.

Size of equity being sold
One of the things that should be discussed is the equity portion of the company being sold. This could range anywhere from 1% to 100%. You as the business owner will determine what stake you're willing to let go off depending on how much control you want to retain in the company as well as how much capital you want to raise. If the offer on the table is an acquisition, however, the takeover bid will be that of 100% of your company.

Value and valuation of the business
Another crucial detail that needs to be discussed during business negotiations at this stage is valuation. This is actually the bulk of negotiations in many M&As. Both parties will have to agree on the valuation of the entire company. If a decision cannot be reached at, a private valuation firm can be contracted to make an assessment. However, as the business owner, you still have leeway to negotiate the final amount as well as any exit packages for staff and shareholders.

Retention of current staff
Another ethical point of discussion during the sale of a business is the question of employment security for current staff. It has been the norm for business owners to try and safeguard the positions of their loyal employees by asking that they be retained in the business, at least for a considerable period after the event. You could negotiate to have junior or senior staff retained or a percentage minimum of all your employees.

The direction and vision of the company after the sale
You should also engage the acquiring party on their plan for the business after the acquisition or merger. That is, what is their vision for the company? In what direction do they want to take the company? This is an important part of business negotiations because it allows you to gauge if the other party has the same vision as you. At the end of the day, you want your company to go in a certain direction, whether or not you are in control of it.

Your role in the future of the company
Another important detail that should be in the negotiations is your role in the company after the acquisition. Will you still be at the head, will you be consulting or will you have any role at all? Some people like to negotiate that they be retained in an executive role to help steer the company forward or at the very least to help it navigate through the transition. The prerogative is yours on this.

The result of these business negotiations will determine if the business sale will proceed or not. It will also determine how long till the sale can be completed.