Sale Negotiation and Agreement Structuring - CapitalQ

Sale Negotiation and Agreement Structuring

So you have done the hard work …

  • Your business is as ready as it will ever be
  • You know the tax consequences and
  • How you will minimise the tax impact, and
  • You now have an interested party who can see what you have built and want to take it off your hands …

But, one purchase price is not necessarily equal to another, even if the headline figures aren’t far apart.

Agreement terms can vary widely, and each one, even those that seem minor or innocuous at first, could have a big impact, including on the tax outcome! Examples include –

  • Your ongoing commitments to the purchaser
  • Your restraint of trade
  • The allocation of the purchase price between Stock, Plant and Goodwill
  • Any earn-out or delayed purchase price.

These are all examples of agreement terms, amongst many others, that can have a significant bearing on the commercial and personal success of a deal irrespective of the price on offer.

Don’t be fooled by the old “they are all just standard clauses” routine. Even if that is the case, it doesn’t necessarily mean you have to agree to them. Or at the least, you need to understand the commercial reality they bring.

Remember, while your business broker is certainly on your side looking to get you the maximum sale price, they only get paid when a sale goes through, so it may not always be in their best interests to advise you to push back and secure better terms. Plus they cannot legally advise you o the tax consequences of any agreement the put in front of you.

That’s just one reason why it so often pays to have a separate, totally independent, Adviser helping you to get the very best (overall) result.

Accounting & Tax

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