Different views between buyer and seller in the M&A process

Common potential conflicts between buyer and seller in the course of an M&A process

In the course of any M&A process, conflict situations between the buyer and the seller of a company occur time and again. In M&A practice, we very often see that both parties experience ups and downs in the course of the M&A process. The more professionally both parties are prepared and advised (M&A advisor + lawyer + auditor + tax advisor), the higher the probability of a mutually acceptable negotiation outcome.

Possible conflict potentials in the individual phases of the M&A process. In practice, there are different perceptions regarding:

• a realistic timetable
• the mutual clarification of confidentiality between buyer and seller (e.g. topics such as enticement of customers, employees, term, after-effect, ...)
  
• the sales procedure itself (bidding procedure, one-on-one, exclusivity, ...)
  
• the content and form of the letter of intent (brief or detailed)
  
• the valuation of the company (valuation procedure, comparable M&A transactions, financial planning, ...)
  
Structuring of the transaction (cash/shares; immediate purchase price/earn-out payments, debtor warrant, seller loan, debt free/cash free, locked box...) 

• the guarantees and warranties (buyer's goal: as extensive and detailed as possible; seller's goal: few guarantees and warranties)
• the amount and term of an escrow account (seller's objective: no escrow account if possible; buyer's objective: the highest possible amount for the escrow account with a term of two years)
• the non-competition clause for the seller
• the manner of integration of the acquired company
• the scope of the due diligence in terms of time and content, up to and including the number of due diligence examiners
• ....