In the M&A world, believe it or not, there are courses teaching individuals how to get the upper hand, sometimes at the cost of unsuspecting sellers. Elite institutions offer training on how to secure family-run or privately-owned businesses for the lowest possible price.
Now, M&A transactions are inherently intricate, and it’s only natural for buyers and sellers to have different objectives. In an ideal scenario, both parties negotiate in good faith, striving for a mutually beneficial resolution. However, when certain buyers prioritize their gains ruthlessly, the negotiation landscape can become adversarial.
In such situations, under-informed sellers often find themselves outmaneuvered by expert buyers focused on maximizing profits for their investors. These buyers employ a series of crafty tactics, including:
- Exclusivity Ambush: Many M&A negotiations feature a ‘no-shop’ clause, barring sellers from courting other potential buyers. This clause generally lasts for a short span (typically 45-90 days), but cunning buyers can stretch it, especially when dealing with novice sellers.
- The Waiting Game: Buyers may adopt a delay strategy, demanding additional documents or expressing sudden “concerns”, attempting to exhaust the seller’s patience and resources.
- Deal Retrading: After securing your trust and initiating negotiations, these buyers might claim newfound issues as a pretext to renegotiate the initially agreed-upon price. More often than not, this was their plan all along.
- Emotional Manipulation: Astute buyers might capitalize on your personal milestones like anniversaries or family events, scheduling urgent meetings around these dates to pile on the pressure.
The harsh reality is that in every sector, while many operate with integrity, there are those who don’t hesitate to deploy devious strategies. Especially when post-sale interactions between buyers and sellers are minimal, buyers have little incentive to negotiate fairly. This often leaves unprepared sellers vulnerable in a high-stakes match.
Entering this arena is akin to a boxing bout. Facing a seasoned player when you’re relatively new is akin to a mismatched fight. This disparity highlights the crucial need for specialized advisors to ensure you’re not blindsided in such negotiations. Remember, a business with minimized risks attracts more potential buyers. Ensure you’re well-equipped to navigate these complex waters.