Purchase Price Negotiation:

A group of four entrepreneurs, who were equal partners in an engineering-consulting business, approached us to assist them with the sale of their business.  They had already received a letter of intent, setting out a base purchase price of $800,000 for the shares of their business and a potential to earn another $300,000 if the business met certain performance targets over the three-year post-closing period. 

We examined the business and identified strategies through which we could convince this purchaser to increase its offer.  This purchaser was a synergistic purchaser and therefore we set about including not only the intrinsic value that was not incorporated into their offer, but set out to incorporate some of the economies of scale that we predicted the company could achieve.  Through several rounds of negotiations, we convinced the purchaser to increase their offer to $1,000,000 base plus up to an additional $400,000 on the basis of the future performance of the company.  Further, we assisted with the economic structure with the management contracts with three of the four owners who wanted to stay on as employees of the company, post-closing, and we successfully negotiated a buy-out of the fourth owner who was ready to move on a pursue other opportunities and wished not to participate in the up-side post-closing potential bonus.  

To round-out our holistic service, we recommended legal council, who was successful in working with the buyers’ council and adequately protected our clients’ rights with the appropriate mix of representations and warranties provided by vendor and purchaser, to see the transaction through to closing.

back to Project Profiles