Highest Price is Not Always the Highest Priority
Many M&A experts believe that the highest price may not be the most important factor in putting a deal together. Here is one such expert’s opinion of the most important factors:
- The assurance that the sale will close promptly.
- The deal terms, e.g., cash, stock, notes, all cash at closing, earnouts, contingencies, etc.
- Total price and/or consideration.
- Legal issues.
In many cases, the legal issues can make or break a deal. The expert mentioned above feels strongly that the Representations and Warranties requested by the buyer should be submitted along with the Letter of Intent. He feels that the business should not be removed from the market until there is basic agreement on the Reps and Warranties; this negotiation may be more complex than the price, especially if the buyer is not willing to bend.
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