Two Types of M&A Deal Breakers
Copyright Jack Mixner. 714 449 1040. www.mixnerstrategy.com
Want to de-rail your deal to sell your company?
Here's how (Silver, 148):
- Don't disclose all your liabilities. That's pretty straight forward. While it seems obvious that a complete balance sheet is part of the equation, missing it will ultimately derail your deal.
- Accept back-end payments (some kind of back end financing) cause problems. Examples:
- Royalties as a portion of future earnings
- A non-compete agreement
- Subordinated note.
What are the possible times to take a note? It might make sense to take a note from the buyer when your company is losing money.
How to avoid problems? Involve a lawyer who gets the process and, at the same time, wants the deal to happen.
Always get the best professional advice possible as part of your negotiation. Include tax advisors and legal representation.
Reference
Silver, David A. Cashing Out. How to Value & Sell the Provately Held Company. EnterpriseDearborn. 1993.