Well Capitalized

What are the Most Commonly Negotiated Legal Terms when Selling a Business?

Discussion of important negotiation terms for business owners when selling their company. Brent Pietrafese, attorney with Calfee, Halter & Griswold, joined us for another deep dive into legal due diligence to cover some of the most commonly negotiated terms in M&A transactions.

See below for discussion topics.

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Discussion topics include:

  • High level overview of an M&A due diligence timeline. (:50)
  • What is the difference between an asset transaction and a stock transaction? (3:55)
  • What is a 338(h)(10) and what does it help accomplish from a tax perspective? (6:10)
  • What protections are available to minority shareholders? What protections should business owners retaining a minority stake in the new business focus on in negotiations?  (7:27)
  • What if a minority shareholder disagrees with the majority on the timing of an exit? (10:20)
  • What are the most heavily negotiated terms during M&A due diligence? Discussion of representations and warranties, indemnification, non-compete, non-solicitation, and confidentiality. (11:30)
  • Key terms when negotiating a post-transaction employment agreement. (16:09)
  • What is an incentive compensation plan and what does it accomplish? (18:14)
  • Why are non-compete clauses necessary in both acquisition documents and employment agreements? (18:55)
  • How do severance negotiations relate to non-compete provisions? (20:44)
  • Advice for business owners thinking about selling their business from a legal negotiation standpoint. (21:19)