- How to Negotiate With Buyers to Maximize Your Exit
- Recap and Learnings
- Is This Your Year for Getting Acquire’d?
- Making a Great First Impression
- What Buyers Expect of You and Your Listing
- How to Vet Buyers on Acquire.com
- How Deal Structures Affect Your Exit
- How to Negotiate Like an M&A Expert
- What If You’re Not Getting Offers?
- Let’s Maximize Your Exit Today
- Free Resources
- Webinar Q&A
- Recap and Learnings
Happy New Year, everyone! It’s Andrew, and I’m so glad I got to kick off 2024 with you during our latest seller webinar.
Afraid you missed out? No worries. Watch the video above or read the recap below to catch up.
We ended 2023 discussing acquisition prep and how it streamlines your deal. This month, I wanted to talk about successfully navigating your deal through expert negotiation tactics and a deeper understanding of buyers to maximize your exit.
Ready to hit the negotiation table? Here’s what you need to know.
How to Negotiate With Buyers to Maximize Your Exit
Recap and Learnings
Is This Your Year for Getting Acquire’d?
Four years ago, I started Acquire.com with one goal in mind: “Build the world’s most founder-friendly startup acquisition marketplace.”
I’m so proud of our progress with that goal in 2023. We iterated our technology, trained more M&A advisors, and helped thousands of founders like you sell their businesses.
But a highlight of the year was definitely introducing our seller webinar series. Preparation and education help you sell, and I’ve learned my fair share after scaling and selling two multimillion-dollar businesses. Plus, give me an excuse to talk about helping founders for an hour, and I’m so there.
What did we cover in these webinars?
2023 was the year of preparation, and this year we’ll dive into the dealmaking trenches, starting with negotiations. What do buyers expect from you? How do you negotiate with different deal structures? What do you do if things go wrong?
Here’s a tip to help you get off on the right foot with buyers: make a killer first impression.
Making a Great First Impression
You can’t take back a first impression. What buyers notice in that first interaction will color the rest of your deal. Don’t waste time blowing off messages or foregoing a deal schedule when you can impress buyers in three simple ways.
Ultimately, buyers want to see that you’re available, informed, and prepared for this acquisition. Not sure how to demonstrate those qualities? Review the steps below to see how easy it is.
In my experience, selling a business takes the same amount of time as a full-time job. It’s not something you casually squeeze in on the weekends. You’ve got to be ready to answer buyer calls and messages at any time or at least within 24 hours.
Quick responses show you’re serious about selling and willing to put in the work to move the acquisition forward. Buyers don’t want to waste time on an unserious seller. And the longer you delay emails or messages, the less serious you look.
Take a second to introduce yourself while responding to their messages. You’ll work closely with the buyer for several weeks, if not months, so tell them about yourself, your motivation for selling, and your acquisition goals. Being upfront about your intentions fills in gaps for buyers that they might otherwise fill with unflattering assumptions or guesses.
Once you build that initial connection, expand on it during buyer calls. Keep your calendar open for these meetings and use them to build goodwill with the buyer. That goodwill will pay forward during negotiations when you need to bargain for something the buyer is reluctant to give.
Buyers won’t take a risk on a business that they know nothing about. It’s your job to sell them on your startup and inform them of the opportunities it offers. Appearing tight-lipped or ignorant about your own business is a massive red flag for buyers.
One way to highlight your business is with a “Living Question and Answers” document. A Living Q&A tracks common buyer questions and declares that other buyers are interested in your business. Plus, if you’re asked multiple times about the same topic, you keep the answers all in one place.
You can also inform buyers about your business by connecting your metrics. Showcase real-time data on your listing to demonstrate that buyers can trust you to be honest about your business’s health.
Lastly, follow our advice on perfecting your listing to make your startup stand out. Our customer success team knows what buyers look for on the marketplace, so connect with us to ensure your listing is as attractive as possible. Think of it as the engaging movie trailer that motivates buyers to get tickets to the show.
Acquisitions are all about timing – sell when your business is hot, and you’re more likely to maximize your exit. But list your business for months with little buyer activity, and interest shrivels up.
Setting up a deal schedule and deadline is a sure way to show buyers you’re ready to move quickly. Instead of waiting for buyers to set things up, lay out the ground rules for them at the start.
A deal schedule tells them when you’re accepting NDAs, taking buyer calls, and when you expect formal offers. Giving buyers a deadline will motivate them to move quickly on your business before someone else does.
Instead of waiting weeks for buyers at different stages to get on the same page, control the process yourself. Show buyers you’re organized and motivated enough to keep things moving and they’ll know you’ll do the same later in the deal.
What Buyers Expect of You and Your Listing
Some buyers review hundreds of listings a day, so how do you capture their attention?
I recommend curating your listing and using buyer calls to showcase fit, credibility, and opportunity. Buyers will pursue businesses suited to their expertise that promise great growth opportunities and have legitimate success. Start conversations early to determine if your business offers all three traits.
What should those early conversations look like? Keep these strategies in mind when talking to buyers:
- Anticipate their needs and questions. When you hop on a call with buyers, ask them, “What made you take this call with me today?” Pinpoint what they find attractive about your business (financials, tech, potential growth) so you can emphasize those features throughout the call. The easier it is to talk about these features and answer the buyer’s questions, the better the fit.
- Back up all claims with facts and figures. Nothing kills an acquisition faster than surprises and numbers that don’t add up. That’s why we encourage you to attach a profit and loss (P&L) statement to your listing so buyers can see the data for themselves.
- Be upfront about problems (and potential solutions). No business is perfect, so don’t try to pretend yours is the exception. Due diligence will suss out any skeletons in the closet, so it’s better to build trust with the buyer by outing them right away. Plus, buyers might view your business’s “problems” as opportunities, depending on their skills and expertise.
- Be easy to work with (have done your homework + open to negotiate). Your willingness to communicate and answer early questions shows buyers how the due diligence process will go later. No buyer wants to feel like they’re pulling teeth to get information out of you, and it delays the deal for everyone if you can’t promptly and accurately answer questions about your business.
- SELL the opportunity – what makes your business S.P.E.C.I.A.L.? Never stop selling your business to buyers. They want to know why they should spend thousands or millions of dollars acquiring your business, and you can do that by emphasizing why your business is S.P.E.C.I.A.L.
- Share unique selling points (USPs) like a novel technology you’ve created.
- Prepare evidence of your business’s success such as a P&L statement.
- Emphasize opportunities like a new market to explore or a product to iterate.
- Counter objections from buyers with valid reasoning for your asking price or valuation.
- Invite scrutiny to show you have nothing to hide and address buyers’ concerns upfront.
- Answer all questions to advance the deal and build trust with buyers.
- Leverage buyer interest because the more buyers interested in your business, the more buyer conversations you have, and the more offers you potentially receive. You can use those offers to increase your valuation and negotiate up your price.
Honesty, Transparency, and Opportunity
Would you buy a car from a salesperson who lied about the car’s mileage or maintenance history? No – you only want to buy from people you trust. M&A buyers are no different, so use honesty, transparency, and potential opportunities to build that trust from the start.
Tell them why you’re selling, even if it’s because of an issue with the business. Better they hear it directly from you, right away, than months into the process during due diligence. Hide one thing and buyers will suspect you’re hiding more, like a potentially worse problem.
And be honest about the kinds of offers you’re open to. Buyers don’t want to waste time drafting a formal offer if you’re going to turn down anything with seller financing or an earnout. If you want all cash at close and a short transition period, tell buyers right away so they know your expectations. Just remember that the more offers you’re open to, the more you’ll receive, and the higher you can leverage your price.
Another way to show buyers you’re trustworthy is to be transparent about your business’s health. Upload a P&L statement and other documents so buyers can see the numbers for themselves. Keep a living Q&A with common buyer questions so they know others are interested and asking these questions about your business. Create a confidential information memorandum (CIM) to concisely pitch your business to buyers.
While you’re opening up about your business, don’t be afraid to highlight how buyers can benefit from the acquisition. Play up your business’s strengths and paint the weaknesses as opportunities. Maybe you’re profitable, or growing fast, or you built some novel tech that will revolutionize the industry. The more excited you are about your business’s potential, the more likely buyers will make an offer.
How to Vet Buyers on Acquire.com
Now that you know what buyers expect of you, let’s talk about what you should expect of buyers.
Just because someone makes you an offer doesn’t mean they’re the right fit for your business. You want to put your hours of hard work into the hands of someone you trust and who can help you achieve your acquisition goals.
Ask the following questions to vet buyers before you spend time dealmaking with them.
Are They Capable?
Before you even start talking to buyers, see if they’re capable of completing the transaction by looking for a Verified Funds badge on their Acquire.com profile. If they’ve verified their funds, you know they’re good to pay for your business.
But are they capable of running your business? Research buyers’ LinkedIn profiles to gauge their previous acquisition or entrepreneurial experience. For example, if your business needs a marketer to scale, check buyers’ LinkedIn profiles or Google them to see their career history.
Remember, the buyer will conduct due diligence on you. Return the favor to ensure they’re the one you should sell to.
Are They Serious?
When researching buyers, take a minute to look through their Acquire.com profile too. What do they say about their acquisition experience or criteria? How prepared are they to take on a new business?
You should also pay attention to the questions they ask about your startup. Buyers who’ve done their homework won’t ask high-level questions answered in the listing. Serious buyers will ask detailed questions about your startup that show they’re thinking through the opportunity and its benefits. They’ll respond quickly to your questions and messages, and if you ask, they’ll tell you if they feel prepared for the acquisition process.
Are They Credible?
Credible buyers aren’t afraid to share their acquisition history or experience with you. They’ll verify their identity on their Acquire.com profile and answer your questions about past acquisitions. Buyers can’t divulge all the details due to NDAs, but if they open up about previous acquisition sizes or if they provide references you can check, they’re likely credible.
How Deal Structures Affect Your Exit
We handle all kinds of acquisition deal structures to help maximize your exit. It all depends on your acquisition goals and what you want to prioritize in your deal.
Maybe you want to close quickly for a short transition period. Or you don’t mind staying on longer with the business to secure a bigger check. With thousands of closed deals under our belt, we’re familiar with some of the more common deal structures you might see on the marketplace.
These common deal structures include:
- Cash at close. This is the best deal structure you can get, with the buyer wiring you 100 percent of the purchase price on the closing date. But it also poses the most risk for buyers, who have to put a lot of money on the line. Don’t be surprised if you ask for all cash at close and the buyer asks to lower the purchase price to offset that risk or asks you to stay longer for the transition period and ensure everything runs smoothly.
- Earnouts – conditional payment on performance. Earnouts also offset buyer risk by making a portion of the purchase price conditional on meeting business goals. For example, the buyer might make 10 percent of the purchase price conditional on the business growing 20% in annual recurring revenue (ARR) in one year. If you’re staying on with the business post-acquisition, earnouts can help you land a higher purchase price since you’ll be involved in achieving its goals.
- Seller financing – you finance some of the price. Your ideal buyer might not have the funds to pay all cash at close for your business. By being open to seller financing, you broaden your buyer pool by allowing the buyer to pay part of the purchase price now and the rest over a set period. This is one way to close the gap between your needs and the buyer’s needs and ensure the acquisition is a win for both parties.
Dealmaking is all about give and take, which is why you’ll have to sacrifice time or money to get all cash at closing or close the pricing gap with an earnout or seller financing. Don’t see it as an obstacle but as a compromise, so you and the buyer both walk away happy.
How to Negotiate Like an M&A Expert
Negotiation is a compromise, not a battle. That doesn’t mean you can’t fight for certain things – a higher purchase price, better terms, a different deal structure – but understand that you might lose the entire acquisition if you’re inflexible.
One example of flexibility is being open to different deal structures. Your ideal buyer could be someone who needs seller financing or an earnout to make the deal work, but they might walk away if you’re dead set on all cash at closing or a certain purchase price. Is not selling your business at all worth a slightly higher price or a shorter transition period?
When you entertain multiple deal structures, you’re likely to receive several more offers, which can help you start a bidding war. Make your business as attractive as possible and use the interest to drive up the price or exit on ideal terms.
Pricing low to high is ALWAYS the move. By maximizing buyer interest, you increase your leverage and drive valuation up. Starting high limits interest and decreases leverage because you’re desperate for any offer, leading to a potentially lower valuation.
Also, consider negotiating on price ranges, not absolutes. Establish an ideal (high) price, a good (average/expected) price, and a walk-away (low) price you’d be willing to sell for.
But negotiations are about people as much as numbers. You won’t even reach the negotiation table if you don’t follow up on every potential lead and conversation.
It might take three, four, five, or however many messages before you hear back from a buyer, but that persistence can pay off in an advantageous sale. Maybe it was a bad time for them to buy, or they were pursuing another startup, but the right buyer can come from anywhere at any time.
And when you follow up with those buyers, be open and upfront about your intentions and situation. Don’t paint the business to be something it’s not, and be transparent about your goals for the acquisition. Buyers won’t meet you halfway if they don’t understand your motivations or desires for the deal.
What If You’re Not Getting Offers?
If your inbox is collecting dust and your calendar empty of buyer calls, it’s a sign to do some introspection and ask these questions to fix the problem quickly.
Is It You?
Your actions could be setting off red flags for buyers – don’t think of it as a callout but an encouragement to make some changes.
The first thing to look at is your asking price. I know you’ve run the valuation calculations and deemed this the best price for your startup, but buyers might not see it that way. Asking prices set way above current market trends are more likely to turn buyers away than inspire them to make an offer. Like I keep saying, it’s better to price low so you can negotiate high once you have offers in hand.
But if your asking price is reasonable, reflect on your recent actions too. Are you responding promptly to buyer messages? Are you rushing the deal? Are you being rude or uncooperative? Are you refusing to negotiate for a transition period?
Buyers might have to work with you for weeks or months to close this deal, so they’re going to look for a respectful and serious partner to negotiate with. Being difficult to work with or unresponsive won’t help you prove your business is worth investing time and money into.
Also, don’t be afraid to be proactive and ask for offers from promising buyers. If you hop on a call that goes well, ask the buyer, “Hey, where are you in terms of submitting an offer? What else do you need from me?” At worst, they’ll say they’re not interested and you can both move on. At best, they provide feedback and a timeline of when you can expect an offer.
How Can You Close the Gap?
As tempting as your startup might be, some buyers need a bit more incentive to pull the trigger. You can close the gap for them by derisking the acquisition and proving your startup is worth the investment.
Start by lowering your asking price to meet buyers in the middle. A cool feature on Acquire.com is that if you reduce the price by just 10%, we’ll notify every buyer who signed an NDA. They’ll quickly flood your inbox with inquiries, ending your dry spell before long.
You can also open yourself up to different deal structures and be flexible with the terms to make buyers more comfortable. Establishing an even give-and-take is crucial to closing a deal. You might have to sacrifice a shorter transition period or all cash at close to get your business Acquire’d at all.
Lastly, give the acquisition and your business time. Deals rarely close within weeks, so hunker down for a months-long process, especially if your business is large and complex. You could also use this time to grow your business a bit more, applying feedback from buyers to take your business to the next level before you sell.
How Can We Help You?
We’re helping startups get Acquire’d all day, every day. There’s nothing we love more and nothing we do better. How?
First, we’ll optimize your listing so it attracts ideal buyers. Once it’s as tempting as possible, we’ll blast your startup via email and social media to 350,000+ buyers. Our targeted newsletter and social media campaigns will bring many interested buyers right to your doorstep, and then our one-to-one sales and negotiation coaching will help you close the deal.
Our team of M&A experts will guide you through the listing, coach you on buyer interactions, help you prepare for and understand the acquisition process, properly value your business, and increase your odds of successfully getting Acquire’d.
Let’s Maximize Your Exit Today
Acquisitions are as much about people and relationships as they are numbers. Luckily, our free M&A team will coach you through these interactions so you secure the best deal possible.
We’ve worked with thousands of founders and boast 15+ years of M&A experience. It’s safe to say we know how buyers think and how you can negotiate with them for favorable terms.
Sign up now and submit your listing to begin your acquisition journey. We’ll connect you with over 350,000 buyers and help you navigate the marketplace until your business is in good hands.
- Webinar slides – Check out the slides below and read through the important ones in the recap.
- Ask our experts to help prepare your business for the marketplace – Submit your listing to see if you qualify for free acquisition support from our in-house M&A team.
- Seller Etiquette: 5 Behaviors That Help You Build Trust With Buyers – Learn how to inspire more buyer confidence and increase your chances of closing with the ideal buyer.
- Free negotiation articles – Prep for the negotiation table and learn how to impress buyers with our free resources. Browse dozens of expert blogs explaining how to negotiate a business sale, how to avoid deal fatigue, who does what in the acquisition process, and more.
If you don’t have many interested buyers, would you recommend chasing them if you haven’t heard anything for a couple weeks?
Yes! Buyers typically consider multiple acquisitions at once, so you need to keep them engaged and motivated to acquire your business. That means checking in regularly, setting deadlines, and creating a deal schedule to move your acquisition forward. Ask your acquisition success manager for help stage-gating your acquisition.
What is the average timeline to sell a business on Acquire.com?
It varies, but most acquisitions close between 60 and 90 days after going live on the marketplace.
I listed a month ago and someone offered 70 percent cash at close and 30 percent after three months of support. Should I wait or go with them?
Do you need a clean break to pursue other ventures, retire, or something else? Can you delay these plans for another three months? You’re already getting most of your cash at closing, so another three months to help the founder settle in sounds like a reasonable offer in exchange for the remaining 30 percent.
I recently incorporated my business as an LLC – is this a problem when selling?
No, not a problem. Just ensure you’re set up to sell as an LLC and not an individual. Email or call our customer support team and we’ll look into this for you.
Is having recurring revenue a plus when selling the business?
Yes. Recurring revenue adds predictability to your company’s performance, which reduces the risk of acquiring it. It’s also easier to compare companies on recurring revenue models to understand their relative strengths and weaknesses. As a result, you might find it easier to negotiate a higher purchase price and friendlier terms with recurring revenue (and even get your business pre-qualified for financing).
If my business has a 90 percent profit margin, can I sell it for 5-6x profit?
Many factors affect your pricing multiple, not just profit – revenue, growth rate, churn rate, and more. To learn what multiple your business will likely sell for, review our multiple reports of past acquisition data. They’ll give you a solid baseline from which to set your asking price based on real market feedback.
Would you recommend pretending you got an offer to convince others to make a move?
No, this would be negotiating in bad faith and could result in legal action. Acquisitions are based on mutual trust. If you bluff or act dishonestly, not only will you ruin your reputation with the acquirer, but also in the startup community. Buyers talk to each other, so the truth would emerge eventually. You’re much more likely to get the offer you want by being honest and open with buyers. That said, if a buyer makes a legitimate offer, there’s no harm in letting other interested buyers know provided you’re not breaking an exclusivity agreement (in other words, you’ve not signed or accepted a no-shop clause).
Is it better to say you’re open to offers than list at a low price?
Listing with “open to offers” doesn’t necessarily mean you’ll get a higher price for your business. Many buyers want to know your business is within their budget and capable of generating a return before they contact you. Otherwise, it could be a waste of time. Listing with a price attracts more buyers and sets expectations early, which could mean you negotiate a higher purchase price than you expected.
Where are your buyers located?
Our buyers are located all around the world, including the US, Europe, Asia, and Australia.
Are people buying no-code apps?
Yes, people buy no-code apps on Acquire.com. While it’s true that buyers can’t extract the underlying code, your financial performance, operations, customers, and so on add serious value. Discover how no-code entrepreneurs build and sell faster in this Bubble case study on Acquire.com.
How important are pitch decks when selling a business?
You can use a pitch deck instead of or to supplement an executive summary or CIM (confidential information memorandum) to market your business to buyers. The goal is to highlight your business’s best features and growth potential without having to explain every detail of how it works (that comes later). Your acquisition success manager can help you create marketing materials to ensure you sell quickly and for the highest price. We also recommend recording a video introduction to connect with buyers on a more emotional level and boost credibility in your business listing.
What questions should we ask buyers?
When fielding buyer inquiries, you need to establish that the buyer has the means to acquire your business and the expertise to grow it. For example, have they verified their funds and identity? Have they the skills and experience to grow your business? What are their long term plans? You also want to ensure they’re a good fit. Do your goals and values align? Are they a culture fit? How will your employees react to them? Your acquisition success manager can help you prepare questions to vet buyers and ensure you’re not wasting time on people who aren’t the right match for your business.
How do I start a bidding war for my business?
Start by pricing competitively to attract the most interest. Then create a deal schedule that invites buyers to submit indications of interest (IOIs), and later, initial offers or letters of intent (LOIs). As you discuss your acquisition with each buyer, inform them that others have also expressed interest in your business. You don’t want to play buyers off against each other but keep everyone informed as offers arrive so they have a chance to reconsider theirs. It’s not always about the best price, but the terms and fit for your business.
With a software business, how much do you have to show to potential buyers? Isn’t there a risk that they just copy your source code and move on?
Yes, that’s a risk, but we protect you in several ways. First, the buyer must sign an NDA to review your private information, which gives you legal protection against them stealing or misusing your data. You can also thoroughly vet buyers through their bios. Check they’ve verified their ID and funds and connected their LinkedIn account. Only move forward with credible buyers you can trust. Finally, you’re in control of what you share. If your code is especially innovative, explain that to the buyer and perhaps only share portions of it. Ultimately, even if they copy your source code, they haven’t copied your business. Execution is what matters.
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Does Acquire help guide sellers on legal issues like contractual obligations, reps and warranties, employee and asset transitions, seller liabilities, and so on?
Yes, we can guide you with legal templates and resources, but we can't represent you. For example, if you’re selling your SaaS business under the Guided by Acquire program, we can help you evaluate legal wordings under letters of intent (LOIs) and asset purchase agreements (APAs). Otherwise, we recommend speaking with counsel for advice specific to your situation.
How does seller financing work?
Seller financing is where the buyer makes a closing payment for a portion of the purchase price and then pays the rest to you in instalments. First, you negotiate the amount of seller financing to offer and then formalize the arrangement with a promissory note. For example, you might agree to a 75 percent closing cash payment plus 25 percent in instalments over 24 months. Once you and the buyer sign the promissory note, attach it to your APA appendix. Learn more
If the buyer doesn’t have proof of funds but is the best offer, should I only sign the LOI when they show proof of funds?
It depends on why the buyer hasn’t proven their funds. If they plan to verify their funds, ask them to do so before you sign the LOI. If they can’t verify their funds for some other reason, ask to see a term sheet or other document proving they have the funding in place to acquire your business. Avoid any buyer who refuses to prove they have the funds to acquire your business – because they probably don’t.
Typically, how long is each stage in the deal schedule? From first call to initial offers to final offers?
Typically, around 30 days after your listing is live. That's a great time to let buyers know the last day for taking briefing calls, initial offers, and final offers. Your deal schedule should be around four to six weeks long to give buyers time to line up financing, analyze your finances, do a code review, and so on. You want to give them enough time to make an offer that meets your requirements. If your deal schedule is a week long, for example, buyers won’t see much activity and may take that as a red flag. Propose a deal schedule when you’re generating enough interest to start funneling it into formal offers.
If I vet a buyer and they don’t seem serious, how do I politely turn down their interest?
Just be honest. Tell them thanks for their interest, it was nice meeting them, but you don’t think the acquisition will work out between you. Don’t be rude or off-hand since you want to keep the door open. Equally, if you spot any red flags, feel free to disqualify them permanently.
I’m looking to sell my SaaS business for all cash ASAP, but I don’t want to lower my valuation – is it possible to have it all?
It’s possible but unlikely. The person who wins a negotiation is the one who cares least. If you say you need $7 million and the buyer’s offering $5 million, but you’re not in a rush to sell, you can hold out for a better offer. This strategy only works if your business is truly valued at $7 million. But if you want to sell quickly in an all-cash deal, you should price accordingly and be clear that you won’t accept seller financing, earnouts, or other conditional payments from the start.
I want to be upfront with buyers about my goals, but it feels like I’m giving them too much leverage. How do I balance this?
Honesty creates leverage. Trying to hide the truth or mislead buyers will hurt your acquisition in the long term. It’s much better to be honest about why you’re selling and what you want to achieve so the buyer can understand you and your business better.
How much time should I expect to invest in following up with buyers? I still have to run this business and my new venture, so not sure if I’ll have time to get back to every person.
Selling your business is like taking on another job. You might spend 500 hours on your acquisition, preparing for exit, dealing with buyers, passing due diligence, and so on. But think of the reward! You might feel overwhelmed at some points, but don’t lose focus of your goal. And remember – we can help with all stages of your acquisition to shoulder some of the burden. Just get in touch with our team.
What do you consider an “unrealistic” asking price?
Anything significantly above the average multiple for your business type and size is probably going to be unrealistic (unless you have a truly exceptional business that justifies it). Check out our webinar on valuations to learn how to value your business. Many factors affect your valuation like churn, growth rate, profitability, market sector, business type, and so on – too many to list or describe here. Watch the webinar, and if you have further questions, give us a shout.
What’s involved in your negotiation coaching? Will it really help me sell?
Yes. We're M&A advisors, acquisition experts, and we do acquisitions all day, every day. If you work with us and listen to our advice on preparation, going to market, positioning, and so on, your odds of getting Acquire’d and maximizing your valuation increase dramatically. Let us know if you’d like our help.
What are the benefits/risks of accepting an earnout? I’d rather not have one in my deal, but can it really open up that many more opportunities?
Let's say you're selling a business for two million dollars. You get a million in cash at closing and another million when your business meets an earnout’s performance targets. First, check that the earnout is specific and achievable. If the goals are unrealistic, such as 10x growth or something silly like that, you probably won’t get paid. But if you see future upside in the business and have gas in the tank to work with the buyer to help grow the business further, an earnout can help you negotiate a higher purchase price.
Should I adjust my price range (ideal price, walkaway price, etc) while talking to buyers? Is that common?
Yes. Sometimes, several buyers will tell you the price is too high. That’s real market feedback. You might also hear the same from our team who see deals close every day. If you hear it from multiple buyers, it means you’re pricing your startup outside of market expectations, and it’s going to prevent you from getting Acquire’d. Instead, adjust your price range down to drive interest (and your valuation) up.
What’s your best negotiation tactic?
You've got to be able to walk away. It may get to a point where you sign a letter of intent, everything's going great, but then the buyer reduces the price by 30 percent or something. As you get towards the end of the acquisition, they know you're tired, and the person who cares the least wins an acquisition. So the best negotiation tactic is holding firm on what's critically important to you. Going back to the sale of my first business, I negotiated all cash on close, and that was important to me. I also negotiated a short transition period, so those were deal breakers for me if I didn't get those. So, I held firm, we went back and forth a little bit. It doesn't work all the time. It depends on the quality of your business, but I was lucky enough to do that, and the way I achieved that was, again, being willing to keep the business if I couldn’t get those terms.
What’s an example of a difficult negotiation or buyer you dealt with?
Recently, we helped a founder sell who was having a tough time with the buyer’s terms. The buyer offered 50 percent cash and the other 50 percent in two payments over two years. The seller wanted more cash, but the buyer wanted to de-risk the acquisition with conditional payments. In the end, we helped negotiate a slightly lower purchase price in return for more cash on closing so both the buyer and seller were happy. We see many situations like this and can help you navigate them to get what you want. Feel free to reach out and we’ll happily share how we’d hand the situation. Our help is free and unconditional and could help you get a better price and terms for your business.
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.