18 Sep 10 Common M&A Mistakes to Avoid (#7 of 10)
7. Focusing on price but not on terms
M&A negotiations involve many variables that affect the ultimate value and satisfaction achieved by the parties to the deal. Of course the price is important to both sides, but the terms of the deal should also be seriously considered, such as deal structure, cash at closing, timing of payments, and guarantees and other contractual terms. In some cases, a lower price with more cash up front and shorter terms may be more attractive to the seller. In some cases the buyer may be willing to pay more, if the payments can be made over a longer duration. If both sides will say what they want and why, there is often room to find a solution that works, even if it’s not exactly what each party wanted.
Take home message: Consider the total offer, not just the price.