How to negotiate purchase price and deal terms post LOI? - Searchfunder

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by a searcher from University of California, San Diego
in Berkeley, CA, USA

4yrs ago

How to negotiate purchase price and deal terms post LOI?

Fellow searchers, I am under LOI and have uncovered issues during due diligence that imply a purchase price adjustment as well as changes in some deal terms like seller note to mitigate risks that were not known prior to the LOI.

I have been sharing the pieces of data that I discovered along the way to prepare them for what is coming and it is now time to start speaking about the terms.

I would appreciate any tips/suggestions on how to present the changes.

Thank you!

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reply by a professional 2yrs ago
from James Madison University in Washington, DC, USA

In a purchase price negotiation I worked on last week, I reinforced the following points to my client (buyer): I always recommend clearly laying out how you arrived at the X purchase price and presenting it in a way that is very easy to understand. I like to put myself in the shoes of the person across the table or someone without any knowledge of the deal and ask myself, "Does this make sense?" If it is confusing or doesn't make sense, you need to revise your pitch. Ultimately, both sides of the table will need to be open to compromise in order for any deal to reach the finish line but this is the best approach to start.

reply by a searcher 1yr ago
from Texas Tech University in Houston, TX, USA

Consider the A.C.T.I.O.N formula. Assess Findings: "First, I want to thank everyone for their cooperation throughout the due diligence process. Your openness and transparency have been invaluable. During our review, we uncovered several issues that could impact the overall value and risk of this deal." Communicate Clearly: "To address these findings, we believe it's necessary to adjust the purchase price to reflect these new insights. Additionally, we propose the following changes to the deal terms, including adjustments to the seller note." Table Questions: "We have prepared a list of questions to better understand these issues and their implications. Could you help us clarify the discrepancies between the initial assumptions and our new findings?" Invite Dialogue: "We understand that these adjustments may come as a surprise, and we are here to discuss any questions or concerns you may have. Our goal is to find a fair and balanced solution that addresses these new risks while keeping the deal beneficial for both parties." Offer Compromise: "We are open to hearing your thoughts on these changes and are willing to discuss alternative solutions that could work for both sides." Navigate Emotions: "We appreciate your understanding and patience as we navigate through these adjustments. Our aim is to ensure a successful and sustainable partnership moving forward." By following this formula , you can structure your negotiations in a clear, professional, and collaborative manner.

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