A business owner planning to sell a privately held Florida company may come up against a number of different types of matters: legal, human resource-related, financial, business and intellectual property-related, to name a few.
Per Forbes, here are some factors to consider during a merger and acquisition from the points of view of the owner and management team.
Valuation
Although an appraiser may provide a value, this number is actually negotiable, depending on answers to the following questions:
- Is the buyer a strategic or financial buyer?
- What are the market comparables?
- What valuation did the company use in its last round of financing?
- What prices did employees and early-stage investors pay in recent share sales?
- What proprietary technology does the company own or license?
- What legal, financial and business risks does the company face?
Also relevant may be the management team’s experience and expertise, whether multiple bidders are interested, what the prospects and opportunities are for the company’s additional financing rounds and other matters.
Buyer due diligence
The seller should expect any prospective buyer to thoroughly investigate the company’s assets, contingent liabilities, obligations, litigation risks and other matters, particularly because there has been none of the scrutiny that publicly held companies receive from the markets. To facilitate the investigation and ensure privacy of the company’s confidential documents, the seller may set up an online data room populated with contracts, IP information, employee information, capitalization table, financial statements, corporate documents and more.
Letter of intent
Terms that the buyer and seller should negotiate in the letter of intent include the price and how it will be paid, price adjustments, details about the exclusivity/no-shop provision, what terms are binding and nonbinding, indemnification terms, etc.
Chron.com notes that the terms of the sale may also include brokers or agents that are involved, and financial companies that are facilitating the deal. Dispute resolution methods should also be included.
