Given the complexities of M&A processes, there are a number of factors that should be assessed when reviewing prospective buyer parties. While price consideration is one of the most important considerations to assess in a buyer and their respective offer, it is also important to determine the level of cultural fit between both parties, ensuring that trust can be established and maintained throughout the often arduous due diligence process. As outlined in the video above, maintaining expectations, facilitating communication, and mitigating common anxieties are some of the many roles an intermediary should have in the M&A process.
Understanding Offer Dynamics
During negotiations, it is vital to ensure that any offers for a business are well documented in the form of an Indication of Interest (IOI) or Letter of Intent (LOI). Unfortunately, as Mike Moran alludes to in the video, there can sometimes be discrepancies between verbal offers communicated with an intermediary and written offers that have gone through the necessary approval channels. Discrepancies between these values can significantly impact a seller's perception and trust of a buyer. This not only alters negotiation strategies but also damages the trust between the parties involved.
The Importance of Written Confirmations
Our experience emphasizes the importance of having offers in writing before engaging in deep discussions or setting expectations with clients. As advisors, we must navigate the delicate balance of sharing hopeful news while tempering expectations until official documents reflect those discussions. This cautious approach helps maintain credibility and manage the emotional landscape of the sellers, who are often navigating one of the most significant transactions of their lives.
Communication and Trust
Timely and transparent communication during the negotiation phase is vital. Delays in feedback or changes in terms without prompt clarification can erode trust and complicate the process. Both buyers and sellers should strive for open, consistent communication to facilitate a smooth transaction. This includes quick responses to inquiries and clear, documented commitments.
Seller Anxieties and Expectations
Selling a business is an inherently anxious time for any seller, often a once-in-a-lifetime event. Ensuring that sellers are not caught up in the emotions of what might be but focused on the realities of the offers and actions taken by the buyer is essential. Advising clients to remain objective and verify that the buyer's actions align with their promises can help maintain a grounded approach during negotiations.
Conclusion
In M&A, it's not just the financials that matter but also how parties communicate and fulfill their commitments. Ensuring that all offer details are documented and followed through on can make the difference between a successful deal and one that falls apart weeks down the line. At M&A Healthcare Advisors, we advocate for clear, consistent, and documented communication to navigate the complexities of buyer negotiations effectively.
If you are considering selling your healthcare business and need expert guidance to navigate the negotiation intricacies, contact us for professional advice tailored to secure the best outcomes in your transaction.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or opinions of Finalis Securities, LLC. Securities offered through Finalis Securities LLC Member FINRA/SIPC. M&A Healthcare Advisors and Finalis Securities LLC are separate, unaffiliated entities.