Practical Tips For M&A Negotiations

The negotiation process is a key part of every transaction. In the early stages, discussions concerning the transaction are typically conducted under a non-disclosure agreement (NDA), and the process is business-driven. At this stage, the key players are usually the relevant business representatives on the buyer’s side and, on the seller’s side, the financial adviser or the majority shareholders or the board of directors and executive management, depending on the size and nature of the transaction. Once a high-level mutual understanding has been reached, an indicative offer, or a ‘term sheet’ or similar document is drawn up, which paves the way for the due diligence process to begin.

In parallel with the due diligence process, work also begins on drafting the actual M&A documentation. In addition to the share purchase agreement, this typically comprises several agreements entered into at the same time, which are subordinate to the share purchase agreement. These agreements may