Legal Blog

M & A Nuggets: Win-Win

winIn Stephen Covey’s book “The 7 Habits of Highly Effective People”, habit 4 is “Think Win-Win”.  The use of this habit during merger negotiations can lead to a very successful merger.  A successful merger is not about the purchaser coming out on top on all of the important issues and the seller coming out on the bottom, or vice versa.  It’s not about winning or losing, but rather about both sides holding to their strategies to achieve their objectives, while compromising to allow the other side to do the same.  It is not about giving in, or caving on any issues, but rather focusing on what is truly important to you, recognizing the needs of the other side and resolving issues with those two principles in mind.  For example, as purchaser you want to be able to deduct as much of the purchase price as possible.  But the more the purchaser can deduct, the greater the seller’s taxes on the transaction will likely be.  A Win-Win solution is to increase the purchase price to soften the blow to the seller of the increased taxes, while allowing you to realize the tax benefits of the deduction.  Another example of Win-Win is indemnification – you want the seller to reimburse you for breaches or unknown claims.  The seller does not want its exposure to be unlimited in time and amount.  A Win-Win solution is to focus on those indemnity items that are most likely to incur and/or have the highest potential dollar cost to you, and to agree to reasonable limits on the other indemnity items.  By remaining firm to achieve your core objectives while giving where appropriate, both sides win and will celebrate the merger closing.  Happy New Year!

 

ABOUT GLENN D. SOLOMON

Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress.

 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

 

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