Chapter 07

From indication to offer

Negotiation in a business sale is less an argument about one number than an ordering exercise: which points are settled first, and which are left until the parties have invested enough to want a result.

Indications first

A non-binding indication states a range, the assumed structure, the conditions and a timetable. It costs the candidate little, which is why it should never be treated as agreement.

Its value is comparative. Three indications side by side show which candidate has understood the business and which has copied a formula.

Order of play

Structure before figure. Whether the transaction is an asset deal or a share deal changes the tax outcome for both parties, and a figure agreed before the structure is settled will have to be renegotiated.

After structure come the terms that shift risk: how much is paid at closing, what is deferred, what depends on results, and which warranties are given and for how long.

Where value actually moves

A lower headline figure paid in full at closing can be worth more than a higher one with half deferred over three years. The comparison that matters is what is certain, when it arrives and what has to be done to earn it.

The same applies to working capital. A deal that leaves stock and receivables inside the business is not comparable to one that does not, however similar the two figures look.

Deadlock

When the parties are apart on figure alone, the usual bridges are a deferred element, a vendor loan, or an earn-out tied to a measurable result. Each transfers risk in a different direction, and each is only workable if the measurement can be defined without ambiguity.

Where the gap is about belief rather than risk, no structure will close it. Ending the conversation early is cheaper than a process that collapses during due diligence.

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