Deal Diary: The Turbulent Impact of Financial Players in Healthcare

In an era where healthcare and finance intersect with increasing frequency, the repercussions of investment decisions can ripple through communities, leaving behind a wake of outcomes both positive and negative. A recent examination into the actions of private equity firms within the healthcare sector sheds light on this complex relationship, highlighting the case of Cerberus's involvement with Steward Health in Read More

How Do Lease Assignments and Other Ancillary Agreements Work When Buying or Selling a Business?

Typically, the purchase agreement will contemplate other agreements that are either included as exhibits or negotiated between signing in closing -- so-called "ancillary agreements" or "ancillaries" for short These may include: Lease DocumentsAn assignment of the existing lease or entering into a new lease (especially if the seller separately owns the property used by the business). Employment and Other AgreementsIf Read More

How Do Closing Conditions and Covenants Work When Buying or Selling a Business?

                  Overview In this post, we return to key components of purchase agreements, this time focusing on closing conditions and covenants.  Closing conditions set out the contingencies for when the parties must go through with – or “close” – a transaction.   Covenants are obligations that the parties have between signing and closing and Read More

How Does Indemnification Work When Buying or Selling a Business?

Overview Indemnification rights give the purchase agreement’s representations and covenants teeth, imposing liability on the seller (or sellers) for the buyer’s losses due to the reps not being true or the covenants not being fulfilled.  Usually, these provisions are heavily negotiated, with the buyer wanting full, long-lasting protection, and the seller wanting narrow, short-lived indemnification obligations.  Some Read More

What Do I Need to Know About the Purchase Price, Payment Terms, and Earnouts for Selling a Business?

The Heart of the Deal The definitive acquisition agreement – whether a stock purchase agreement, an asset purchase agreement, or a merger agreement – is where the transaction terms from the LOI are implemented in a negotiated, binding manner. In large transactions, it’s customary in most deal processes for the buyer to prepare the first draft of the acquisition agreement. In small-business transactions, usually the Read More

How Does the Due Diligence Process Work for Buying or Selling a Business?

Conducting a due diligence examination is a fundamental part of buying a business.  Without conducting diligence, a purchaser has no way of knowing whether the business is as presented.  Typically, the buyer will send the seller a due diligence request list that will ask for the following, among other things:  Business Calls and meetings between the purchaser and the seller, the seller’s management team, and Read More

What Should Be Included in a Letter of Intent (LOI)?

After initially exploring a transaction but before conducting a full due diligence inquiry, the parties will usually enter into a letter of intent (LOI) or term sheet.  A carefully prepared and negotiated LOI will establish critical deal terms prior to drafting and negotiating the definitive agreements.  Getting an appropriate LOI in place makes sure the parties really have the foundation for a deal in place and Read More

How Do I Structure My Deal?

Asset deal? Stock Deal? 338 Election? Reverse triangular merger? F-Reorg? Installment sale? “Deal structure” refers to how a business sale is organized or “structured.” Buyers and sellers have options when deciding how to structure a deal. For most lower middle market businesses, asset deals usually make sense, although stocks deals and more complex structuring may be appropriate depending on the Read More

Who Do I Need on My Deal Team to Sell My Business?

Your Deal Team For both buyers and sellers, you need the right team to get the deal done right: M&A Advisor A business broker, investment banker, or other M&A advisor can advise on many aspects of the transaction. They can also help you market your business to potential purchasers and help you identify potential acquisition targets. They can also assist with valuations, diligence, and other aspects Read More

How Does Purchasing or Selling a Business Work?

It’s A Big Deal The decision to consider buying or selling a business is a big one and can be motivated by as many factors as there are buyers and sellers. For the purchaser, it can be the chance to start working for herself or it can be a way to grow and expand. For the seller, it can be the path to retirement or freeing up cash and time to pursue other opportunities. The Process Business sale and purchase Read More