Buyers vs. Sellers: Negotiating Mergers & Acquisitions [e319]

Whether you are buying or selling a business, the transaction goes through the same steps. However, they are viewed from different perspectives. Sellers may not want to fully disclose all the blind spots while Buyers will want otherwise. Nasir and Matt battle it out in this Buyer vs. Seller to determine who has the advantage! Round 1: Prepare to Negotiate - Letter of Intent When it comes to selling a business, some of the most critical work is done before you even make your first phone call. A letter of intent serves as a way for both parties to get on the same page and lays the groundwork for what each of you can expect from the other. https://www.youtube.com/embed/t4KVprJ9m94 Round 2: Due Diligence and the No Shop Periods Buying or selling a business is a complex process. It's not just about talking about purchasing or selling the company's assets. For prospective buyers, it’s important to understand that buying a business is not all about the numbers. Thorough due diligence of all facets of your target company is necessary for you to make a meaningful offer. https://www.youtube.com/embed/5tK8uMHZArQ Round 3: Warranties and Representations Representations and warranties are the biggest reason that verbal agreements are so risky. Representations and warranties set a floor on the quality of the purchase, define each party's responsibilities, inform both parties how they can end the deal, and help structure payments. https://www.youtube.com/embed/QoxOnUEGdxs Round 4: It's Closing Time Signed, sealed, and delivered. The signing and closing of a transaction is often the most critical stage in the process. It can either be smooth or cause delays that could undermine the transactions. https://youtu.be/AgEtBno39YA “Full Podcast TranscriptNASIR: All right. Welcome! We are talking buyers and sellers, acquisitions, mergers. It’s a lot more than what you would think. MATT: That depends on what side you’re on. NASIR: Everyone in business ends up at this point at one point in time. MATT: It’s a very interesting dynamic. This is kind of a very weird interaction. This is Legally Sound Smart Business where your hosts – Nasir Pasha and Matt Staub – cover business in the news and add their awesome legal twist. Legally Sound Smart Business is a podcast brought to you by Pasha Law PC – a law firm representing your business in California, Illinois, New York, and Texas. Here are your hosts, Nasir Pasha and Matt Staub. NASIR: All right. Welcome! We are talking buyers and sellers, acquisitions, mergers. We are going, once again, head-to-head – Matt and I – taking different perspectives. This time around, we’re not flipping a coin. Matt and I discussed it prior, and I am taking the buyer’s point of view. MATT: That means I’ll be taking the seller’s point of view. NASIR: That would be weird if you also took the buyer’s point of view, so that’s good. MATT: Well, obviously, there’s not a lot of positive results from the pandemic, but one thing I’ve noticed that has happened that’s been a positive is there have been a lot of transactions between companies – like you said, mergers and acquisitions, things of that nature. We’ve seen quite an uptick of representing buyers and sellers in those sorts of transactions just because of the nature of it. I don’t know necessarily if they were more motivated and what the actual reasoning was, but – at least in my opinion – there’s been an increase in those sorts of transactions. NASIR: Absolutely. If you looked at the stats on M&A in general, it’s a lot more than what you would think. You would think that – because of uncertainty, because of this, because of inflation – things would actually slow down, but that doesn’t seem to be the case. M&A attorneys are quite busy. We’re talking about buying or selling a business. We’re general practitioners. We work with medium to small-sized businesses, but everyone in business ends up at this point at