How to succeed in negotiations during the sale of your company?

The art of negotiation lies in the ability to make controlled compromises to reach an agreement.

In order to optimize the negotiation related to the valuation of your company’s shares, we provide below some initial tips to conduct your negotiations.

1- Preparing for Negotiation is a Key Step

To prepare for negotiation, it’s necessary to have a thorough understanding:

  • A – Of your market;
  • B – Of your company;
  • C – Of your expectations and the expectations of potential buyers.

A – Understanding the Value Chain (Macro)

  • By the executives:

Understanding your direct and indirect competition, their growth projects, and the synergies sought through external growth.

  • At OutMatch,

we assist our clients in understanding their value chain in detail, to explore synergies and economic connections that could underlie overvaluations during the sale. Indeed, an unused externality of a company in its market could be a customer acquisition lever for an upstream or downstream player (e.g., the Chiens de France – Ascentiel Groupe deal, managed by our team). These intellectual business challenges drive our creativity on a daily basis.

 

B – Understanding Your Company (Micro)

  • By the executives:

Having an overview of your company’s strengths; Implementing solutions or providing answers to limit risks for the buyer (client dependencies, dependence on key personnel, structure empowerment, etc.).

  • At OutMatch, we reveal:
  1. The uniqueness of your company;
  2. Your mix of resources and skills that will interest/seduce your buyer;
  3. How your company can seize growth opportunities and reveal its full potential.

C – Understanding Your Expectations and Those of Buyers

  • By the executives:

Knowing your expectations: company valuation, duration of post-transaction support, earn-out, etc.

  • At OutMatch, prior to the process:
  1. We identify deals that have taken place in our client’s economic sector;
  2. We assist you in valuing your company, determining the valuation through the production of a report using various methods to approach the asset price (comparable stock, transactional, and DCF method);
  3. We conduct a preliminary market approach, anonymously, through our networks, to understand the expectations of actors in your market.

2- Negotiation Phase

During negotiations, it’s important to remember that both parties want to create maximum value for their operation. The buyer (seller) wants to buy (sell) at the best price.

Therefore, it’s good to apply some advice:

  1. Establish a relationship of trust and transparency with your counterpart;
  2. Present the company and its potential;
  3. Guide all discussions towards solutions to the issues raised in the context of exchanges.

Organize several exchange sessions:

  1. Reinforce the buyer’s vision of the development opportunities for your company;
  2. Assist your buyer in explaining your valuation and the capacity to activate synergies;
  3. Identify and provide clear and structured answers to the buyer’s objections by mobilizing collective intelligence (seller, advisor, buyer).

Utilize the strength of the auction process:

To offer you maximum opportunity to achieve your valuation expectations and find the buyer corresponding to your corporate culture.

In a nutshell:

Proceed with the next steps of the process with confidence: we accompany you in the preparation and conduct of your M&A negotiations.

For any further details on your M&A negotiation topics: maxime.nicolas@outmatch.fr

 

 

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