How to Bridge Valuation Gaps in M&A

John Blair, Partner M&A Attorney at K&L Gates In M&A, it's very common for buyers and sellers to disagree on the value of the business. If both parties cannot agree on the price, the deal could fall apart. However there are certain strategies and tools that both parties can use to compromise and be happy during closing.  In this episode of the M&A Science Podcast, John Blair, Partner M&A Attorney at K&L Gates, shares best practices on how to bridge valuation gaps in M&A.  Things you will learn in this episode: •Bridging gaps in M&A Valuation •Earnouts  •Seller Financing •Equity structure  •Market's impact on Bridging M&A Valuation Gaps Ready to take your M&A to the next level with software made to manage each stage of the deal process? See how DealRoom can facilitate your next deal at https://dealroom.net Episode Bookmarks 00:00 Intro 04:13 When to get involved in the M&A Process 07:50 Negotiations during LOI 09:42 Bridging gaps in M&A Valuation 11:09 Using Holdbacks to Bridge M&A Valuation Gaps 13:20 Seller Financing 15:00 Earnouts 16:43 Earnouts on Intellectual Property 18:45 Key Variables in an Earnout 23:14 Earnout payment structure 25:53 Making Earnouts Successful 29:08 Structures of Seller Financing 36:24 Traditional terms of seller financing 38:20 Equity structure 41:04 Stock options 43:52 Minimizing the cash upfront during a sale 46:34 Contents of Letter of Intent 49:14 Advice for first timers 50:01 Craziest Thing in M&A