Company Sale in Practice: How to Maintain Negotiating Leverage Until Closing
One of the most common mistakes in a company sale process is losing focus on day-to-day management and on maintaining a competitive process after accepting the NBO or signing the LOI. Emotions run high, while at the same time there is a sense that “the most difficult points have already been agreed.”
Meanwhile, more than half of potential transactions do not result in a successful closing.
In practice, it is precisely the period between the preliminary offer and transaction closing that generates significant risk.
Company Financial Performance Negotiates For You
Management’s primary responsibility during negotiations and due diligence is to continue running the business as if it were not for sale.
The due diligence process and SPA negotiations usually take several months. Investors review not only historical data, but also pay close attention to current trends, revenue stability and the quality of earnings:
- A decline in revenue or profitability becomes an argument for lowering the price.
- Stable or improving results help maintain negotiating leverage and valuation.
An investor is buying the future. Any weakening of business performance during the process reduces the seller’s bargaining power and increases the risk of changes to the deal terms.
Negotiation Exclusivity – Negotiate Time, Not Just Price
In mid-market and larger transactions, granting the investor exclusivity after signing an LOI is standard practice. Private equity funds and strategic buyers almost always expect such comfort.
Exclusivity, however, is also subject to negotiation:
- Negotiate the shortest possible exclusivity period,
- Keep the process moving,
- Maintain time pressure on the investor.
Keeping alternative options open for as long as possible – possibly until due diligence is completed and a binding offer is received – significantly strengthens the owners’ negotiating position.
When Deal Fatigue Sets In
A lengthy sale process naturally leads to fatigue on the company’s and sellers’ side. Documentation expands, the same questions keep resurfacing, timelines stretch – while the owner may already be planning how to use the proceeds from the future transaction. Experienced investors know that in the final stage many sellers simply want to “get the deal done.”
This is when the following tend to appear:
- price adjustments,
- requests for additional contractual protections that shift more risk to the seller,
- unfavorable changes in post-transaction corporate governance arrangements.
The best protection against renegotiation is a strong position built on real alternatives and professional process management.
Proper Preparation Reduces the Risk of Renegotiation
The most effective way to limit risk is thorough preparation before launching the sale process:
- well-organized legal and financial documentation,
- consistent management data,
- identified operational, financial and tax risks,
- realistic financial forecasts.
The fewer unexpected findings during due diligence, the less room there is to prolong the process, reduce the price or change other key transaction terms.
Selling a Company Is a Strategic Process, Not a One-Time Event
Accepting an NBO and signing a letter of intent lay the foundation for a demanding and sometimes lengthy M&A process.
Navigating it requires operational discipline, tight control over the timeline, viable strategic alternatives and sound judgment.
In a company sale, the objective is not simply to find an interested investor or secure an offer. It is to maintain negotiating leverage all the way through to closing.