Negotiating a deal
Hi,
Say you have found a target company you want to acquire.
For the sake of example: you think the target is worth $100m and you expect them to think they are worth $200m.
As a corporate buyer you can leverage your shares as a way to bridge the valuation gap on top of deferred payments and earnouts.
What are the negotiation tactics you use?
How do you drop a first offer and what sort of offer would that be? How much of the total consideration do you put upfront vs deferred typically in a first offer? How do you stage your sequence of offers and how do they look like?
Any good source of info on how to best negotiate a deal?
Thank you!
Read never split the difference
Just a thought:
if you think it’s worth 100 offer 99 or whatever. If you can lay out certain milestones for them that if they hit them you’d be happy to pay them 200 then make the extra 100 contingent on an earn-out (like they hit a higher EBITDA number than what you think they can hit and if they do so you’ll let them earn the 200 valuation and feel good about paying 200 for a more profitable / better business)
It sounds like you need a buyside banker to show you the ropes of M&A so that you can do this on your own in the future, truthfully
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