<story><title>What I learned selling my company</title><url>https://www.harryglaser.com/what-i-learned-selling-my-company/</url></story><parent_chain><item><author>cj</author><text>&amp;gt; I was advised that 50% of signed LOIs actually close. I bet it’s less. You will see the LOI and dream of trading stress for riches. Remember: Less than 50% chance of closing.&lt;p&gt;100%&lt;p&gt;Which is why I hate that exclusivity is industry standard.&lt;p&gt;It feels exploitative that acquirers can demand exclusivity in a deal when the chances of it closing are less than 80%.&lt;p&gt;Imagine selling a house and taking it off the market because you got an offer with a 50% chance of actually closing 3 months later.&lt;p&gt;Even worse, most acquirers will say “nope” if you ask them to cover your legal fees if they back out of the deal.&lt;p&gt;This happens because sellers of companies only sell 1 or 2 companies in their lifetime, while buyers of companies typically do dozens and dozens of transactions. There’s an extreme power imbalance in favor of acquirers. Most sellers learn these lessons the hard way.</text></item></parent_chain><comment><author>paulddraper</author><text>&amp;gt; There’s an extreme power imbalance in favor of acquirers.&lt;p&gt;1. Sellers can tank the deal as well for any reason, e.g. if they feel the deal is not going as fast as they like (and I recommend agreeing on a general timeline).&lt;p&gt;2. Sellers generally don&amp;#x27;t get very many offers, so the opportunity cost is often not as high as you might suppose.&lt;p&gt;3. Sellers can negotiate more friendly terms (e.g. closing sooner), but usually choose to concentrate 100% of their leverage into the price.&lt;p&gt;4. Due diligence is expensive for both parties, but the seller can easily re-use much of their side. Non-exclusivity would mean the seller could easily entertain many costly offers simultaneously.&lt;p&gt;No buyer in their right mind would agree to non-exclusivity, though they can agree to a reasonable window for that exclusivity.</text></comment>
<story><title>What I learned selling my company</title><url>https://www.harryglaser.com/what-i-learned-selling-my-company/</url></story><parent_chain><item><author>cj</author><text>&amp;gt; I was advised that 50% of signed LOIs actually close. I bet it’s less. You will see the LOI and dream of trading stress for riches. Remember: Less than 50% chance of closing.&lt;p&gt;100%&lt;p&gt;Which is why I hate that exclusivity is industry standard.&lt;p&gt;It feels exploitative that acquirers can demand exclusivity in a deal when the chances of it closing are less than 80%.&lt;p&gt;Imagine selling a house and taking it off the market because you got an offer with a 50% chance of actually closing 3 months later.&lt;p&gt;Even worse, most acquirers will say “nope” if you ask them to cover your legal fees if they back out of the deal.&lt;p&gt;This happens because sellers of companies only sell 1 or 2 companies in their lifetime, while buyers of companies typically do dozens and dozens of transactions. There’s an extreme power imbalance in favor of acquirers. Most sellers learn these lessons the hard way.</text></item></parent_chain><comment><author>tptacek</author><text>These are definitionally the most sophisticated buyers and sellers in the entire economy. Organic market norms dictate what the industry standard is; it doesn&amp;#x27;t make much sense to think about protections. If you&amp;#x27;re selling, and you want some kind of protection, structure the dealmaking or negotiate the deal to get what you want.</text></comment>