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8 things that are important in any merger or acquisition

Selling your business is a time-consuming and stressful process. To ease the process, proper preparation is essential. In this blog you will read which matters are important and how you can increase the success rate of your transaction.

  1. Get a knowledgeable financial advisor

When selling your company it is wise to usethe added value of a financial advisor. For companies that do not have a corporate finance department or have little experience with the merger and acquisition process, a good advisor is of great importance. For example, an advisor will provide support with the many challenges within the sales process.

  1. Have the interested party sign an NDA

The selling company is responsible for preparing a complete Non-Disclosure Agreement (NDA). An NDA is a non-disclosure agreement that is signed by an interested party at the beginning of the process. The non-disclosure agreement ensures that the vendor can exchange confidential information with interested parties without sharing it with others. By signing an NDA, these parties indicate that they will not pass on the information in question to third parties or use it for their own purposes. An NDA will in most cases be drawn up by your adviser.

  1. Organize legal support

Important legal steps are taken in every merger or acquisition process. It is important that all these steps and the accompanying agreements are properly recorded and watertight. The network of Florijnz can help you find the right lawyer.

  1. Draw up a Letter of Intent (LOI)

TheLetter of Intent is used in almost every merger or acquisition process. By signing this LOI the buyer wants to confirm his intentions and strengthen his position. By signing an LOI he obtains exclusivity for a period determined by both parties. Clear agreements and good wording are essential. A good LOI is written transparently and neutrally and is therefore to the advantage of both parties.

  1. Remain decisive in the negotiation process

The negotiation phase is an exciting and decisive phase when selling your company. Large companies often have their own M&A department to conduct the negotiations on, for example, price and conditions. In other cases it is wise to leave the negotiations to your corporate finance advisor. They have the knowledge and expertise to represent your interests in a professional manner.

  1. Take into account warranties and indemnities

Agreeing on the right deal terms is crucial to a sustainable transaction. Often certain guarantees and indemnities will be agreed upon before the deal is closed. These guarantees and indemnities are a means to reasonably and fairly share the risks of a business acquisition between the buyer and the seller. Careful recording in the sales agreement helps to improve the position of the seller or buyer.

  1. Prepare well for the audit

When the sale reaches a more advanced stage, the buying party will carry out anaudit. In this investigation the buyer checks the accuracy of the information presented by the seller. Not onlythe financial books are examined but also the legal and tax matters. It is important for the seller to make sure thatthe information is clear and complete for the buyer. A good preparation will ensure that the audit will be conducted quickly and efficiently.

  1. Make sure your organization keeps performing

The acquisition process is an intensive and emotional process that requires a lot of effort. However, it is important that this does not affect the performance of your company at that time. Poor performance at the time of the deal can have a decisive impact on the price or the entire outcome of the deal. A buyer will closely monitor the financial performance of the company during the acquisition process. Strong performance at the time of negotiation will ensure that the passions of both parties are optimally harnessed.

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