What should I look out for in deal terms and deal structure?
You can achieve a higher transaction value by being more flexible on deal terms. However, you must consider the risks involved in accepting flexible terms from a buyer. It is normal for a buyer to request that you take a portion of the sale price through seller-financing or earn out. The buyer may also offer a higher price if you retain partial ownership in the business. In either of these cases, you should only consider this if you have researched and have confidence in the ability of the buyer to deliver on their business plan post acquisition. Talk is cheap. It is up to you or your advisors to look into a buyer’s background, track record and experience. And never let the buyer work in the business before the deal is complete. The structure and terms of the deal will have a significant impact on tax liabilities. Stock sale or asset sale makes a significant difference. In determining the right buyer, you should consider not only the tax liabilities, but also the ongoing liabilities of
