Negotiations can be tough for both sides; the acquisition process can be emotional and requires careful handling. The more information you have collected during the due diligence stage, the stronger your case will be in your offer. Keep your original objectives in mind. You may need to walk away if there are obstacles to achieving your objectives.
Your advisors will assist with negotiation and documentation support and any purchase price adjustments. Your CPA will look at financial and tax structuring as your attorney draws up the sales contract. The contract is contingent on a final examination of all assets to validate what is represented in the deal and a final inventory of assets.
At all costs, avoid overpayment of acquisition. From an accounting standpoint, if an overpayment has occurred, it’s likely that goodwill and certain intangible assets may need to be impaired in the future. This can result in a significant charge to the company’s earnings in the period of impairment. In the long run, it will affect your company’s earnings and impair of your intangible assets.
The entire acquisition process usually takes between five and ten months; if it is taking longer, both parties need to take a step back and determine the holdup.
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