Closing the Deal. The Definitive Guide to Negotiating the Sale of Your Business

Closing the Deal

The Definitive Guide to Negotiating the Sale of Your Business

Photo of Jacob Orosz

by Jacob Orosz (President of Morgan & Westfield)

Questions Answered in This Book

  • How can one employ a straightforward approach to enhance their negotiating stance?
  • What are some recommendations for organizing the transaction to optimize after-tax proceeds?
  • What practical steps can be taken to effectively prepare for and carry out due diligence?
  • In negotiating a purchase agreement, what clear advice is available?
  • What straightforward information is provided for assembling a deal team?
  • What tactics are suggested for maintaining confidentiality about the sale from employees, customers, and competitors?
  • What strategies can be employed to effectively communicate with and retain employees while managing their expectations during mergers and acquisitions?
  • What recommendations are available for preparing crucial sale documents?
  • Can you provide a step-by-step guide on negotiating the letter of intent in the context of mergers and acquisitions?
  • What essential tips are offered for making decisions and negotiating key terms related to an earnout?

Overview

If you’re in the process of selling your business or have recently received a letter of intent, you’ve come to the right place. In this straightforward, practical guide, I’ll take you behind the scenes to offer you tried and tested advice for one of the most important negotiations of your life.

Closing the Deal teaches you the art and science of negotiating the sale of your business. You’ll learn the fundamentals of every step of the process, from the letter of intent to the closing. This essential field manual offers you an effective blueprint to maximize your negotiating leverage and foolproof strategies to optimize your deal structure and after-tax proceeds. Closing the Deal is for owners of businesses valued from $1 million to $50 million and contains proven tactics for avoiding the most common pitfalls in negotiating the sale of your company.

I wrote this comprehensive handbook to give entrepreneurs actionable advice based on my more than 20 years of M&A experience valuing and selling hundreds of businesses. As the host of the M&A Talk podcast and president of Morgan & Westfield, I bring you strategies and tactics from experts throughout the industry to successfully close the sale of your business.

Table of Contents

Chapter 1: Building Your Team

  • M&A Advisor or Investment Banker
  • M&A Lawyer
  • Accountant
  • Tips for Hiring and Working With Advisors
  • Other Specialists

Chapter 2: Managing Employee's Expectations

  • Informing and Retaining Your Key Employees
  • Alternatives to Non-Competes with Employees

Chapter 3: Maintaining Confidentiality

  • Strategies for Maintaining Confidentiality
  • Non-Disclosure Agreements
  • FAQs About Non-Disclosure Agreements
  • Content and Analysis of NDA Language

Chapter 4: Preparing Key Sale Documents

  • Teaser Profile
  • Confidential Information Memorandum
  • Normalized Financial Statements
  • A Complete Guide to EBITDA and SDE
  • Choosing SDE or EBITDA to Value a Business
  • Releasing Information in Stages

Chapter 5: Maximizing Negotiating Leverage

  • Tip 1: Conduct Pre-Sale Due Diligence
  • Tip 2: Reduce Sunk Costs
  • Tip 3: Create Multiple Options
  • Tip 4: Maintain Emotional Objectivity
  • Tip 5: Focus on Running Your Business
  • Tip 6: Keep Your Business on the Market
  • Tip 7: Beware of Deal Fatigue
  • Tip 8: Listen Before Speaking
  • Tip 9: Use Honesty To Your Advantage
  • Tip 10: Make Conservative Statements

Chapter 6: Negotiating the Letter of Intent

  • Overview of the Process
  • Contents of a Letter of Intent
  • The Process of Negotiating the LOI
  • Tips for Negotiating the LOI
  • Problems and Solutions

Chapter 7: Structuring the Deal

  • Common Deal Structures
  • Ensuring a Favorable Deal Structure
  • Financial Components of Deal Structure
  • Legal Components of Deal Structure
  • Legal Structure and Entity Type
  • Allocation of Purchase Price and Taxes
  • Partial Sales

Chapter 8: Deciding on an Earnout

  • Overview
  • Objectives of Earnouts
  • Tips for Using Earnouts
  • Key Elements of an Earnout
  • Legal, Accounting, and Tax Implications

Chapter 9: Conducting Due Diligence

  • Preparing for Due Diligence
  • Due Diligence Overview and Process
  • Due Diligence Areas
  • Tips for Conducting Due Diligence
  • Sample Due Diligence Checklist

Chapter 10: Drafting the Purchase Agreement

  • The Process from Signing the LOI to Closing
  • Outline of a Typical Purchase Agreement
  • Negotiating the Purchase Agreement
  • Legal Form of the Transaction
  • Supporting Documents to the Purchase Agreement
  • Non-Compete Agreement
  • Representations & Warranties
  • Indemnification

Chapter 11: Orchestrating the Closing

  • Preparing Emotionally for the Closing
  • The Closing Process

Chapter 12: Conclusion

    Appendices

    • Appendix A: Glossary
    • Appendix B: Due Diligence Checklist
    • Appendix C: Purchase Agreement Clauses
    • Appendix D: List of Closing Documents
    • Appendix E: Escrow’s Duties

    Closing the Deal

    The Definitive Guide to Negotiating the Sale of Your Business

    About the Author

    Photo of Jacob Orosz

    Jacob Orosz

    President and Founder of Morgan & Westfield

    20+ Years of M&A Experience: Over 20 years of experience facilitating mergers, acquisitions, sales, and other business transfers with transaction values up to $500 Million.

    300+ Transactions: Successfully participated in or managed the sale of over 300 privately held companies representing both buyers and sellers in North America, Central America, South America, Europe, and Asia.

    Author of 6 Books on M&A: The Art of the Exit, A Beginner’s Guide to Business Valuation, The Exit Strategy Handbook, Closing the Deal, Acquired and Food & Beverage M&A

    Host of M&A Talk: Host of the #1 podcast on mergers and acquisitions – M&A Talk.

    Host of Food & Beverage Talk: Host of the #1 podcast on mergers and acquisitions specializing in the food & beverage industry – Food & Beverage Talk.

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    Host of: The #1 Podcast on Mergers & Acquisitions
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    Browse Our Other Books

    Acquired. The Art of Selling a Business with $10 Million to $100 Million in RevenueThe Art of the Exit. The Complete Guide to Selling Your BusinessThe Exit Strategy Handbook. A Complete Guide to Preparing Your Business for SaleFood and Beverage M&A. An Insider's Guide to Selling a Food or Beverage Business
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