February 18, 2011

How will the Buyer pay for your Company?

Chris Covington is a business attorney, with significant experience in mergers and acquisitions in his prior positions as a partner in a mid-size law firm, a Senior Vice President, General Counsel and Secretary of two public companies, and an investment banker.  He recently returned to private practice, and has a blog (bizsalelaw.com) which focuses on the concerns of selling founders and executives.  Chris often advises MergerTech clients.

Understanding how your potential Buyer is going to finance the purchase price for your company may help you maximize the purchase price.  Here is an Inc. article that focuses on current trends in acquisitions financings.

My view of the key “take-aways” for Sellers:

I would also note that early in the negotiating process Buyers are often reluctant to be candid about their financing sources or concerns, and addressing the issue should be done delicately.  Very often it is an issue that is best addressed by your investment banker, broker or your attorney, but in any event, don’t ignore the issue.  Particularly if you are asked to sign a “no-shop” or similar agreement, you do not want to take your company off the market only to later find out that the sale is contingent on a financing that is in fact unlikely.