Rigorous negotiation and clear, detailed letters of intent (LOI) (non-binding term sheets describing the key elements of a transaction).
You want to obtain full value and minimize contingencies tied to the payment of the purchase price. From the beginning of negotiations, we mitigate risks with contingent consideration, earn outs, holdbacks from the purchase price and provisions triggering post-closing adjustments.
The LOI sets forth the payment of the purchase, the structure of the deal (e.g., mix of cash, stock, seller financing, and earn out), employment matters, and closing contingencies.
We draft a detailed and meaningful LOI, frequently using contingencies tied to the purchase price, such as verification of revenue and working capital minimums/adjustments.