Letter of Intent Consulting – an M&A Service Offering from MidMarket Capital
Since publishing our Book, Selling your Software Company – An Insider’s Guide to Achieving Strategic Value Click Here For Our New Book on Amazon our volume of inbound inquiries has more than doubled. What has surprised us is the number of calls we are receiving where the business owner either has a Letter of Intent (LOI) or is about to receive a letter of intent from the buyer. Their emotions go from giddy anticipation to anxiety as they look at a document that is complex and technical and contains several terms that the business owner is not familiar with. Such thoughts as, “Am I getting a fair deal?” What is a subordinated seller note? What does a cash free, debt free transaction mean? How is a net working capital surplus calculated and what are the implications for what I receive at closing. What are all of these reps and warranties? Is a non-compete standard procedure?
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Mistakes in negotiating this very important document can cause the seller to lose $ hundreds of thousands, to $millions depending on the size of the transaction. The other result is that after three months of grueling due diligence, the buyer interprets loose wording in the LOI, intentionally in their favor, and then calls in their very expensive CPA firm and Law Firm to support their claim. The business owner faces a big haircut as these interpretations are captured in the purchase agreement. What very often happens, however, is the owner walks away from the deal. This is a big loss for everybody.
Our hourly consulting service is based on 20 years of experience in negotiating deals with the toughest buyers in the world, Private Equity Buyers. We help to balance the deal experience scale between the buyer’s team and the seller’s team. Our approach is to negotiate the LOI so that there are no unexpected surprises or haircuts at the end of due diligence. We incorporate very specific wording with formulas and examples that cannot be interpreted in the buyer’s favor no matter what big 5 accounting firm or major law firm they bring in. This results in the terms and conditions negotiated in the Letter of Intent become the terms and conditions translated into the purchase agreement. We help get good deals across the finish line.
If this sounds familiar to your situation, please email me at firstname.lastname@example.org, or call me at my direct office number (630) 325-0123 or on my cell at (630) 215-3994