Final Offers and Closing the Transaction
If everything goes to plan, you’re now receiving LOIs from multiple parties. This is often the time to pick one party to proceed with towards a closing and often on an exclusive basis, although there are exceptions to this approach, which you and your banker can discuss. This is where your banker’s negotiating expertise comes into play, and they will work with you to formulate counter proposals and a bidding strategy that optimizes for your desired outcome.
Your banker should have distributed a process letter that tells buyers what they should include and address in their LOI so that you can evaluate proposals on an apples-to apples basis. It is common for LOIs to include ancillary documents, such as comment memos or SPA markups, debt financing commitment letters, due diligence timelines to closing, references or other information requested in your process letter. Work with your banker to determine appropriate “asks” given the circumstances and deal dynamics in order to set clear and realistic expectations.
Selecting a final party with which to partner can be difficult given the number of factors to weigh across a variety of stakeholders involved. However, hopefully at this stage of the process you’ve had sufficient interaction with each prospective buyer to understand their plans for management, employees and operating the business post-closing. If you feel you have insufficient information, work with your banker to schedule subsequent buyer meetings in order to make an informed decision.
After signing a letter of intent, you and your advisors will typically be working around the clock to support confirmatory due diligence and provide your deal attorneys the information they need to finalize definitive agreements, such as the SPA, employment contracts and many ancillary agreements. This is where having a strong team of advisors can significantly improve speed to closing and prevent missteps that can jeopardize the deal from proceeding on the terms and timeline that were originally intended.
- Strive for comprehensive bid packages with few unknowns and a clear path to closing
- Consider strategic fit, speed and certainty of closing alongside price and other terms
How BDO Can Help
The sale of your technology business is likely going to be one of the most significant financial transactions of your life. You deserve a team of experienced professionals, including your investment banking firm, deal attorney and CPA firm, all of whom should specialize in M&A transactions and have a proven track record of delivering premium outcomes for companies like yours.
At BDO, we understand business owners’ objectives and specialize in developing and executing a transaction process that optimizes for our clients’ objectives as shareholders, employers and individuals. We’ve helped thousands of business owners navigate the successful sale of their companies and are committed to supporting you every step of the way.
Our team of investment bankers, TAS, tax and accounting professionals can help you with virtually every aspect of preparing for and executing a successful sale process, from transaction process design to developing the right presentation materials, identifying and contacting potential investors, negotiating letters of intent, evaluating the tax implications of various transaction structures, providing fairness opinions and valuations, offering wealth advisory, assisting with tax planning, and ensuring you close the transaction in a seamless, efficient manner that minimizes disruption to you and your employees.