PATHS FRAMEWORK
The Transaction Phase
A Successful Deal is When All Parties Leave Satisfied.
How Do You Ensure That Happens?
You’ve sent your LOI. Negotiations are underway. But what happens when an issue arises that you can’t compromise on?
The PATHS framework has the answers, supported by independent advice from an experienced community of industry insiders.
Financing and Negotiating a Successful Transaction
From your financial backers to the seller, everyone has to be satisfied that the transaction is sound before it goes ahead.
Most importantly, you have to be happy with it. Here are the questions you’ll have to answer.
Where’s the Money Coming From?
Whether your financing comes through an SBA 7(a), a Search Fund, or another method, someone is putting up that money – and they want to know that your proposal is sound. Your funding should be secured in principal before you begin the acquisition process. However, the road isn’t always smooth. You’ll need to show your backers that you understand how to adapt to challenges and overcome them.
Can You Guarantee that the Money Will Come?
It’s equally important that the seller is confident that you have the funds to see the transaction through. They’ll want guarantees that your money is firmly where your mouth is. Obtaining assurances from all parties is a key part of negotiations. You must be able to confidently and transparently negotiate a deal.
Due Diligence: and This Time It’s Serious
In-depth due diligence is essential when you’re planning to acquire a business. It’s even more important when you’ve already made your initial approach. You’ll need to conduct legal, cultural, and financial due diligence, exploring every aspect of the business you intend to acquire. This may involve hard questions and vague answers – you’ll need to know when to probe further. Every question must have an answer.
Accurately Valuing a Business
You need a comprehensive understanding of valuation methods and analyses. Selecting the right valuation method for the business you’re acquiring, and showing the seller why this is the most appropriate valuation method, are essential steps. Protect yourself from the risk of overpaying. Learn about how to apply different valuation methods to businesses using the resources below.
Negotiations, Compromise, and Sticking Points
The term sheet and LOI should have ironed out whether there are major differences between the buyer and seller. That doesn’t mean issues can’t arise after this stage. When they do, you need to know how to deal with them, or the acquisition may fall through. You must establish what is unacceptable to you – a waste of time is still better than a huge waste of money (and further time!) Equally, it’s important to show that you understand how to compromise where a solution can be found. compromise where a solution can be found. It’s a difficult dance, but you need to learn the steps.
From Interaction to Transaction
Negotiations are almost always complicated. You can speed them up by having an iron-cast case and evidence to back up your evaluation before you begin.
The expert community at ETAInsider can help you turn difficult interactions in your favor, helping you complete a successful transaction at a reasonable cost.
Join the discussion now!
PATHS Framework
- Preparatory Phase
- Analysis Phase
- Transaction Phase
- Harmonization Phase
- Strategy Exit Phase
