Below are ten legal and practical tips for entrepreneurs who are contemplating selling their venture.
1. Be Careful with Private Equity Buyers. Private equity firms are in the business of buying and selling companies. Accordingly, they are extremely sophisticated and savvy and are often represented by large, aggressive law firms. Deals with private equity buyers are generally more complex than those done with strategic buyers due to, among other things, the level(s) of debt added to the target and/or financial engineering. Moreover, unlike most strategic buyers, private equity buyers (i) usually require the selling entrepreneur to rollover part of his/her equity into the acquirer (i.e., to maintain skin in the game) and (ii) may require a financing condition in the acquisition agreement – which obviously adds a level of uncertainty to closure. (more…)