Selling a Business

7. Choosing a Buyer

You should now finalise sale terms.

7.1 Be sure you fully understand all offers eg any warranties or indemnities you will have to provide.

7.2 Play off one party against another so that they raise their offers.

• Be prepared to bluff. The buyers will negotiate, but are unlikely to pull out.

7.3 Choose the buyer you want to sell to.

• Discuss the deal only with this candidate.
• Do not try to negotiate better terms at this stage, as this would destroy any trust that is developing between you and the buyer. A good working relationship is important.

7.4 Quickly agree Heads of Terms with the buyer. This is a signed agreement setting out the deal's chief points.

Parts may be legally binding. For example:

• An exclusivity period during which the seller cannot negotiate with anyone else.
• Payment of the buyer's (or your) costs.

7.5 Tell other potential buyers that you have signed a Heads of Terms with the buyer.

• Keep at least one other buyer interested, as a back-up.