The human side
Reading the room: negotiating with buyers
Negotiating leverage in M&A moves throughout the process. It rarely stays where it started.
Negotiating leverage isn’t fixed on either side. It shifts as the deal progresses, typically with the flow of information, changes in business performance, funding certainty, and, most importantly, the passage of time. A seller-led auction process can concentrate leverage with you as the seller, but exclusivity shifts the balance the moment you grant it. A clean diligence record can protect your price, while an unexpected issue can move the discussion toward indemnities, holdbacks, or withdrawal almost overnight.
When do you walk away and how?
The moment you can’t credibly walk away, someone else is setting the price.
The most powerful form of negotiating leverage is simply being willing to stop. M&A processes create their own momentum. Your management time, advisor costs, disclosure, and stakeholder expectations can make continued progress feel like the only rational choice, even when the deal in front of you has stopped being a good one. The sunk cost fallacy is very real in M&A, and the more time, money, and emotional energy you have invested in a deal, the harder it becomes to walk away, even when the terms no longer justify continuing. Walk-away discipline is the foundation of credible negotiation, and a buyer will usually recognize when you have lost it.
Setting your walk-away terms
Set your walk-away terms before the M&A process begins, before the time and money spent on the deal start to influence your judgment. Agree on them with your board and, where relevant, your key co-shareholders, and stay aligned with each of them throughout the process. The typical red lines will include: the minimum cash you need at closing, the maximum amount of deferred or contingent consideration you will accept, the liability you’re prepared to retain, the restrictions you’re willing to accept, and the role you want (or don’t want) after closing. You should also have a clear view of your alternatives, since you can only assess a deal properly against what you would do without it.
The cost to the business
While you are assessing the deal, the business underneath it doesn’t stop. A prolonged M&A process consumes management time, exposes sensitive information, and can unsettle employees, shareholders, customers, and suppliers, all while the deal itself remains uncertain. The performance of the business is what sustains your valuation, so if transaction demands begin to impair the business materially, you and the board must assess that trade-off directly rather than letting it happen by default. The company must continue to be governed for its current shareholders until ownership actually changes, whether or not the deal proceeds.
Is the decision yours alone?
Depending on your shareholding, the decision to walk away may not be yours alone. Check your shareholders’ agreement and articles. If investors holding a majority, or a specified percentage, of the shares want to accept an offer, they may be able to use “drag-along” rights to require you to sell on the same terms. Investors with liquidation preferences may also view an offer differently from you, since they may be paid first. Understanding these dynamics early will tell you how much room you really have to walk away, and whether you need to bring other shareholders with you. Be aware, too, that advisors paid mainly on a success fee have a natural incentive for the deal to close. Their advice remains valuable, but the decision to proceed should rest with you and your board.
Before and after signing
Bear in mind that your ability to walk away is greatest before signing the SPA. A term sheet, LOI, or NBO is generally non-binding as to its commercial terms, but check its binding provisions carefully, including any exclusivity, confidentiality, and costs provisions, and any obligation to reimburse the buyer’s expenses or pay a break fee if you withdraw.
If you’re within an exclusivity period, check when it ends and what it prevents you from doing, as you may not be able to engage with other buyers until it expires. Once the SPA is signed, you’ll be bound by it and will generally only be able to withdraw if a condition isn’t satisfied by the agreed outside date or a specific termination right arises.
How to walk away
Work with your lawyers to end negotiations correctly. Notify the buyer clearly and in writing, following any notice requirements in the term sheet or exclusivity letter, and make sure the decision has been formally approved by the board. Once you have communicated the end of negotiations, close data room access, ask the buyer to return or destroy your confidential information in line with its confidentiality agreement, and remind it of any restrictions in that agreement on approaching your employees or customers. Keep a record of what was disclosed and to whom. Agree on what you will tell employees, investors, and anyone else aware of the process, as a clear message limits speculation and potential unrest in the company.
How you walk away matters as much as the decision itself. End the process professionally and on good terms. Buyers sometimes return with improved terms once circumstances change, and a respectful exit leaves that door open.
Your employees and company culture
The deal works for you, but what keeps the management team and top performers engaged?
A sale is your decision, but its consequences are shared by the people who helped you build the business. Your senior management team and broader workforce will be affected by the transaction in ways that may be very different from how it affects you, and how you handle that matters for three reasons.
First, the people are often at the center of a buyer’s investment case. Buyers may be acquiring specialist knowledge, customer trust, operational capability, or a management team able to deliver the next phase, not just a balance sheet. Second, you will need many of those people to get the deal done, as they answer diligence questions, sign documents, and keep the business performing while the process runs. Third, a transaction that destabilizes management and key employees can destroy the value it was designed to realize, (including any earn-out milestones), however well the documents are drafted.
Life after the deal: what comes next for you?
Most planning for a sale stops at completion, but it shouldn’t.
Most founders plan intensely for signing and closing, then stop planning the moment the money hits their bank account. Completion is a legal milestone, but it isn’t the end of the transaction’s consequences for you. Whether you’re staying on as a shareholder, an employee, or a member of senior management, or leaving the business entirely, the transaction documents will almost certainly leave you with obligations to meet and rights to protect after closing. Earn-outs, rollover equity, warranties, escrow, employment, governance, and restrictive covenants can all keep you connected to the business for years. A prudent founder plans for this before closing, so that nothing is missed and nothing is breached.
After completion, you may be an employee, director, shareholder, earn-out participant, warrantor, or restricted seller, sometimes several at once. Each role is governed by a different transaction document and carries different obligations, rights, and exit consequences. Work with your lawyers before closing to map them out. Know which role applies to each decision and which document controls it before acting on an assumption that turns out to be wrong.
Staying on or moving on
If you remain in a management role, the nature of that role itself can change quickly. A strategic buyer may change decision-making, budgets, reporting, systems, products, and culture, sometimes within the first few months, and you can move from setting direction to implementing decisions made elsewhere, often with less warning than you’d expect.
Before closing, clarify your authority, objectives, resources, reporting lines, and the buyer’s investment plan directly and record them in your service agreement. You should also agree on what happens if your new role doesn’t work out, including your notice period, how you will be treated as a leaver, and the effect of leaving on any earn-out and equity.
If you’re leaving, a transition period of three to 12 months, either as an employee or under a consulting arrangement, is common to allow you to hand over relationships and knowledge. Make sure the scope, time commitment, and fees are clearly defined, and that the arrangement doesn’t inadvertently extend your restrictive covenants or affect your leaver status.
Post-completion calendar
Several financial and legal obligations continue after completion. Earn-outs require ongoing attention to performance metrics, warranty and indemnity exposure continues during the agreed claim periods, and escrow or holdbacks can delay receipt of proceeds you were counting on. The SPA may also impose ongoing obligations that are easy to forget, such as cooperating with the buyer on post-closing filings and tax returns, and restrictions on announcing or discussing the deal terms, including the price, publicly or on social media. Missing a deadline or breaching an obligation can be costly. Ask your lawyers to prepare a schedule of key dates, obligations, and rights covering these areas:
- Price adjustments: Be aware of the deadline for reviewing and disputing any completion accounts statement.
- Escrow and holdbacks: Record when each retained amount is due to be released and any steps you need to take to trigger release.
- Earn-out: Record reporting dates, information rights, the deadline for the earn-out statement, and the period for raising a dispute. Keep your own records of performance, and raise any concerns with the buyer early and in writing.
- Claims: Record when the warranty, tax, and indemnity claim periods expire and the procedure you must follow if you receive notice of a claim.
- Restrictions: Record when each restrictive covenant expires.
- Insurance: If you were a director, check whether the buyer has agreed to maintain directors’ and officers’ runoff insurance covering your time in office, and for how long.
Keep copies of the signed transaction documents, the disclosure letter, and an archive of the data room, as you’ll need them if a claim is made after closing.
Personal loose ends
Several personal ties to the company are easy to overlook in the rush to close. If you have given personal guarantees for the company’s bank facilities, leases, or supplier contracts, make sure they are released at closing, or that the buyer agrees to obtain their release and indemnify you in the meantime. If you are stepping down, check that you have been removed as a director, as a manager on the company’s trade license, and as an authorized signatory on its bank accounts, and that any powers of attorney you hold have been revoked. If your residence visa is sponsored by the company, or linked to your shareholding, selling your shares or leaving your employment role may affect it, so plan any change in visa or residency status long in advance.
Your wealth and your next chapter
A sale will often turn illiquid equity into cash for the first time, so seek advice before closing on how the proceeds should be received and held, whether personally, through a holding company, or through a family office or foundation structure. Check the tax treatment of your proceeds, earn-out payments, and rollover in each jurisdiction relevant to you.
Founders also tend to underestimate the personal impact of an exit. A business you have built is often a significant part of your identity and daily routine, and stepping away from it can be difficult, even where the sale was exactly what you wanted. Giving some thought to what comes next, before closing, can make that transition considerably easier.
Attorney advertising. The information contained herein is for educational and informational purposes only and is not intended to be and should not be construed as legal advice. Winston Taylor N.V. and WS SELAS are part of the Winston Taylor network as separate legal entities operating from its offices in the Netherlands and Belgium and France, respectively. Further information on Winston Taylor can be found on our regulatory page at: www.winstontaylor.com. Winston Taylor LLP Headquarters: 300 N. LaSalle Drive Chicago, IL 60654-3406. Phone: +1 (312) 558-5600.
© 2026 Winston Taylor LLP. All rights reserved.