The second part in a series of seven of the most common “deal killing” issues and their warning signs…

Negotiation Issues – The way that a transaction is negotiated can determine how quickly and easily a deal moves to completion and can impact the motivation of the parties involved. Often the best approach is to put everything on the table early in the process. New issues, particularly if they are significant, raised midway through the process can damage the spirit and goodwill of productive negotiations. Of course some new topics for discussion will be raised as a normal progression of the negotiation process.

Also, don’t backtrack on issues that seemingly have been “resolved.”  This can prove counterproductive. Instead identify issues that may need to be revisited.

Finally, if negotiations on certain issues aren’t progressing well, table negotiations for a time. Don’t allow your competitiveness or ego to cloud your sound business judgment. This may result in a “win-at-all-costs” attitude, which could jeopardize the transaction.

Security Issues – Since a seller’s long- and short-term financial obligations can be substantial, a buyer wants a certain degree of protection from the seller’s obligations/guarantees. Determining who is responsible for what, and the extent of “protection” given to a buyer can be a delicate negotiating issue. The buyer usually resists assuming full responsibility for these “liabilities” and seeks to set aside money from the purchase price that would offset the seller’s obligations. Likewise when the purchase price is paid in installments or other obligations of the buyer extend over a period of time, the seller strives to obtain the guarantee of a well established and substantial party or collateral to secure the performance of the buyer’s obligations.

Insurance Issues – These issues are closely related to risk issues and most often center on matters of exposure and coverage for both the individuals and companies involved. A potential transaction can break down when there is insufficient coverage to limit the exposure to the buyer or seller. The most critical categories of insurance, depending on the type of business and transaction, include:

  • Property Casualty
  • Product liability
  • Environmental
  • Title
  • Errors and omissions
  • Malpractice

Professional Services Issues – In today’s complex business world, it is prudent to enlist the assistance of professionals to examine the financial, legal and related merits of most transactions. At the same time, it is important that these professionals understand and accept their roles in the process and avoid becoming significant hurdles in the process. These professionals should not control the transaction or the negotiation process (unless directed to do so), but should be involved in negotiating and structuring the transaction. It is wise to get these individuals involved in the process as early as possible to avoid backtracking on issues that may previously have been resolved.

Not all transactions are meant to happen, and for good reasons. But certainly there are transactions that end up being “killed” because something or someone got in the way.

The key to making sure a transaction moves forward is to:

  • Be aware of the most common deal-killing issues
  • Recognize warning signs that signal trouble is brewing
  • Understand how to handle these issues so that, with a little more time, the transaction can be completed

 

 

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.

If our law firm can be of assistance, please call 855-537-0500 or visit www.ksnlaw.com.

 

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