Wed, 1 November 2023
Price and Terms of the Deal
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
In negotiating the M&A transaction both price and terms will be discussed.
While the top-line buyout number is the main focus, the underlying terms should also be considered carefully.
Here’s a list of terms to review:
Payment amount -- how much and when will the payout occur?
Who gets paid -- payment goes to those on the cap table but there may be other factors at play.
Payment structure -- how you structure the deal with regard to taxes and the legal entity of the company is a key factor to consider.
Employee impact -- what is the plan for integrating the companies and how will it impact the employees?
Customer impact -- in the event the buyout is to shut down a competitor then consider how it will impact those customers.
Earnouts -- In the event of an earnout, the payment could be higher if sales targets are met.
The top-level price is important, but the underlying terms often determine if it is a good deal or not.
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