Superior Information Can Give the Prospective Acquirer the Upper Hand in Negotiating a Business Acquisition
We were asked recently, "What is it that gives one party the upper hand in negotiating a business acquisition?"
Is it "attitude," or "touch," or "feel"?
Is it, perhaps, bravado, bluster, false pretense?
Decades of experience in mergers and acquisitions and hundreds of business transactions successfully consummated for our clients have taught us otherwise.
Most often, it is superior information that can give one party the upper hand in negotiating a business acquisition.
And we refer, here, to two different types of information: quality and quantity of information gleaned through the process of due diligence about the target business.
Quite simply, the more the prospective acquirer knows about the target business prior to negotiating the terms and conditions of the acquisition the better. A savvy prospective acquirer will do extensive, even exhaustive, due diligence and will know everything that there is to know, or at least that it can know, about the target business and its assets and liabilities, and its strengths and weaknesses. It is critically important that the prospective acquirer fully know and understand the operations of the target business, and what really matters to and for the target business, and what risks are present in the context of the business acquisition.