Expert opinion

The 3 keys to successfully negotiating and closing a business acquisition deal

Rob Starr, Head of M&A at Shaw & Co, explains what you need to do to negotiate and close a business acquisition deal.

3 minutes
March 18, 2022
Words:
Rob Starr
Images:
Tim Gander Photography
PDF:
Report

Acquiring a business as part of your M&A growth strategy, or through a management buy-in or MBO may seem daunting if you haven't been through the process before. Here are three areas to consider if you are thinking about buying a business:

1 - Negotiation

Inevitably, any negotiation, which all business acquisitions involve to some extent, requires compromise. Deal craft involves focusing on the common goals between parties in order to find a way through any impasse. Understanding the points that really matter and the points on which compromise can be reached takes experience and foresight.

Like a good game of chess, you have to be able to think four or five or more moves ahead. To be able to do that takes a huge amount of deal experience; if you find yourself reacting to what is in front of you without fully understanding the consequences of your next move, you are likely to come up short against an experienced player.

If, for whatever reason, there is a gap in valuation expectations between buyer and seller then this is never easily overcome. However, an earnout – where a proportion of the consideration is paid based the business achieving profit targets – is one popular option that can help bridge the gap.

Rob Starr Head of M&A at Shaw & Co

2 - Due Diligence

When you are buying a business, a robust due diligence process is vital in ensuring that there are no hidden surprises and you know exactly what you are buying. Be it Financial, Legal, Technical or Commercial due diligence there are a few key things to remember:

  • Get the Right Advice, Right From the Start:

Our core advice is the same. Employ a corporate finance advisor who can support you and help ask the right questions.  A corporate finance advisor will also be able to help shape the ‘scope’ of the diligence exercise, helping to reduce cost and time expended by focusing on the issues that really matter to a funder.

  • Be Prepared

In our experience, regardless of which side of the deal they sit on, people are almost always shocked at the level of detail involved when conducting the due diligence process - no stone is left unturned.

  • Compromise

Issues do commonly arise in due diligence. The key is how all parties deal with them. Focus on the common goals between stakeholders in order to find a way through any impasse. Inevitably, any deal negotiation requires compromise. Understanding the points that really matter and the points on which compromise can be reached takes experience and foresight.

3 - Closing the Deal

There’s a lot of hard work involved in completing an acquisition, and there is a great deal of value in having an experienced adviser on your team to make things happen and drive the deal to completion.

We work with UK SMEs and small-cap PLCs that have the ambition to grow their business by acquisition. We often act as an outsourced Corporate Development team helping clients meet their strategic goals through mergers and acquisitions. Our value lies in helping clients build rigour into the acquisition search and execution process. For a confidential, independent, no obligation discussion on how to buy a business, click the 'Let's chat' button.
Words:
Rob Starr
 - 
Director
Read 
Rob Starr
's bio

Sector Content

See all Shaw Reports
The Shaw Report - Healthcare & Life Sciences Interim Review August 2022

Shaw Report

|

August 11, 2022

The Shaw Report - Food & Drink Annual Review July 2022

Shaw Report

|

July 22, 2022

The Shaw Report - Leisure, Tourism & Sport Interim Review July 2022

Shaw Report

|

July 19, 2022

The Shaw Report - Energy & Natural Resources Interim Review June 2022

Shaw Report

|

June 27, 2022

Shaw & Co launches annual analysis of wholesale & retail trade industry

Shaw Report

|

June 29, 2022

The Shaw Report - Automotive, Transport & Logistics Interim Review May 2022

Shaw Report

|

May 19, 2022

Shaw & Co Launches Annual Analysis of Property and Construction Industry

Shaw Report

|

May 6, 2022

The Shaw Report - TMT Interim Review May 2022

Shaw Report

|

May 5, 2022

The Shaw Report - Manufacturing & Engineering Interim Review April 2022

Shaw Report

|

April 8, 2022

The Shaw Report - Food & Drink Interim Review March 2022

Shaw Report

|

March 25, 2022

The Shaw Report - Professional Services Annual Review 2022

Shaw Report

|

March 17, 2022

The Shaw Report - Leisure, Tourism & Sport December 2021

Shaw Report

|

December 14, 2021

The Shaw Report - Health & Life Sciences December 2021

Shaw Report

|

December 10, 2021

The Shaw Report - Banking, Financial & Insurance Services December 2021

Shaw Report

|

December 8, 2021

The Shaw Report - Energy & Natural Resources November 2021

Shaw Report

|

November 16, 2021

The Shaw Report - Technology, Media & Telecoms October 2021

Shaw Report

|

October 28, 2021

The Shaw Report - Automotive, Transport & Logistics October 2021

Shaw Report

|

October 14, 2021

The Shaw Report - Manufacturing & Engineering October 2021

Shaw Report

|

October 1, 2021

The Shaw Report - Food & Drink September 2021

Shaw Report

|

September 27, 2021