Before getting into the due diligence process and other key components of entering a purchase agreement, the buyer will typically provide you with a term sheet or letter of intent (LOI). In this document, the buyer will express his or her interest in entering the transaction and will outline the legal and commercial terms, including the price and structure of the purchase. A term sheet or LOI can guide the purchase process by focusing negotiations on the key terms and identifying deal breakers.
Albert Einstein is quoted, “I used to go away for weeks in a state of confusion”, and for those of us who have successfully managed and led carve-out deals – that state of confusion is the biggest challenge to overcome. Time is precious, and a couple of weeks of confusion leads to delays and costs with technology service agreements, operations efficiencies, marketing and branding strategies, HR policies and packages, finance reporting and banking covenants – so it is best to get those states of confusion out of the way prior to Day 1.
Anyone interested in giving back some of the money from the sale of your company? No?
Money has been exchanged. The business has been acquired. The transaction is complete. Golf and sailboats galore. Any issues and losses arising after this point fall onto the buyer.