It’s not secret that market volatility is presenting increased challenges for both buyers and sellers, regardless of industry. With all things considered, it is important that both parties address the reality that recent events have materially changed the value of a business and desirability of buyers or sellers to participate in a transaction. This is why thinking critically to mitigate the resulting contract risks is so important for lawyers and clients. These conversations need to be transparent to make sure that all of the parties are on the same page from start to finish. 

One particular deal point worth more closely evaluating today is the purchase price adjustments due to accounts receivables. It is normal procedure in selling a business to account for outstanding AR balances in the purchase price and to what degree the seller is compensated for generating those sales. Additionally, the buyer is due to adjust the material purchase price based on uncollected accounts within a specified time period. Where a buyer may have accepted promises from vendors in the past, the market volatility today has brought this certainty into question. 

This may be a time for a strong creative solution that aligns both party’s motivations. If the purchase price is adjusted down on a 1:1 basis for each dollar not collected within said specified time period after purchase and the seller is encouraged to assist with collection, then both buyer and seller have aligned motivations. While this is an effective means of negotiating a proper selling strategy, it is only one of many solutions that could be right for your unique needs when selling your business. 

To have a more personalized assessment of your situation and how to sell your business for the most money today, please use the contact buttons to start our conversation. I will reach our personally to review your goals and establish a plan to meet, and likely exceed, your expectations. I look forward to hearing from you.