Agreeing terms.
WHAT IS ACTUALLY NEGOTIATED
Price
Structure: what is bought, and how paid
Conditions What the seller does afterwards Warranties and indemnities
WHY STRUCTURE MATTERS AS MUCH AS PRICE
A high price paid over years with conditions may be worth less than a lower price paid now.
WHAT THE TWO BROAD STRUCTURES ARE
Sale of the company's shares Sale of the business and its assets
WHAT A SHARE SALE TRANSFERS
The company, with everything it owns and owes.
WHY BUYERS RESIST IT
They inherit unknown liabilities.
WHAT AN ASSET SALE TRANSFERS
Specified assets, leaving liabilities behind.
WHY SELLERS PREFER SHARE SALES
Cleaner exit, and frequently different tax treatment.
WHAT TO TAKE ADVICE ON
Which structure, because it affects tax substantially.
WHAT PAYMENT STRUCTURES EXIST
Full payment at completion Deferred payment over time Payment contingent on future performance A combination
WHAT CONTINGENT PAYMENTS RISK
Not being paid, because performance depends on the buyer's management.
WHAT TO NEGOTIATE IF ACCEPTING ONE
Clear measurement Protection against the buyer's decisions affecting it Security for the deferred amount
WHAT TO PREFER
As much as possible at completion.
WHY
Certainty is worth a discount.
WHAT ELSE TO ADDRESS
Whether you remain involved, for how long, and on what terms Restrictions on competing afterwards What happens to staff
WHAT TO ESTABLISH ABOUT RESTRICTIONS
Their scope and duration.
WHY
Overly broad restrictions can prevent you working at all.
