2 Part Course  | 
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Advanced Negotiation Issues in M&A

2 Part Course  |  Learn the critical commercial aspects impacting on M&A deal value

A variety of buildings including skyscrapers with office buildings and residential buildings

A one-day course presented over two-half days in a virtual class from 9:15am to 1:00pm UK time

Part One

General guidelines for effective negotiation in mergers and acquisitions

  • Negotiation strategy – six building blocks
    • Identify & prioritise your objectives
    • Establish your BATNA
    • Flexibility – why and how it matters
  • Negotiation tactics
    • Win-win
    • Assertive
    • Collaborative
    • Anchoring – where it works & where it doesn’t
  • Tactics for dealing with difficult / unreasonable counter-parties
  • Two (easy) mistakes to avoid
    • Mirror imaging
    • Transferred judgement
  • The 10 aspects affecting the value (why the price isn’t everything)
  • How and why Concessions can help getting the deal through
    • How to maximise value from your concessions
    • The ‘asymmetry of value’ – what is the other party thinking?
    • Using concessions to close the deal

Role and relevance of Term Sheet & Confidentiality letter in negotiation

  • The Confidentiality letter
    • What is it really protecting – three critical issues?
    • The hidden role of the Confidentiality & why it really matters
  • How negotiating the Term Sheet can help advance the deal & avoid disputes
    • The 4 key areas in the Term Sheet
    • The key assumptions regarding the offer/price (why and how this matters)
    • Migrating the Term Sheet to the SPA

The politics of M&A - Strategies for managing the main parties & their advisors

  • Tips for managing your Lawyers, Accountants & financial advisors
  • Key differences in approach between corporate buyers and PE firms
  • Buying from corporate sellers
    • The agency cost issue & how it affects the deal
    • Who is really running the deal?
  • Dealing with owner/managers
    • The psychology of buying from owner/managers
    • How to overcome problems with (inexperienced) advisors/lawyers
    • How to differentiate your offer & close the deal

Structuring the Equity Bridge (Cash Free / Debt free / NWC approach)

  • What does Cash free / debt free mean in practice
  • Strategies for dealing with unsophisticated sellers
  • Bench testing the EBITDA ‘run-rate’ (if used for deriving the Enterprise value)
  • What does ‘Surplus Cash’ cover – typical problem areas
    • “Trapped” cash
    • Other operational cash items
  • Defining “Debt’ – typical problem areas
    • Deferred revenue
    • Warranties by target for goods/ services
    • Litigation
  • The Net Working Capital adjustment
    • Is the net working capital adjustment always required – when to ignore NWC
    • Deriving the target working capital (Peg) – core/ average / normalised?
    • Tips on how to avoid using the wrong PEG (buyers and sellers)
  • How to minimise disputes re the equity bridge post completion

Completion Accounts mechanism

  • Key elements & timeline of the Locked Box mechanism
  • Key negotiating issues in using the Locked Box mechanism
    • Issues with using the right “Accounts”
    • Which accounts should / could be used?
    • The hierarchy of accounting policies
  • Potential areas of dispute (& how to mitigate these risks)
    • Poor/ambiguous definitions
    • ‘Subjective’ (Directors’) valuation of specific balance sheet items
    • IFRS/ GAAP override – good or bad
    • Protecting the buyer against value erosion
  • Pros and cons of Completion Accounts
    • Seller issues
    • Buyer issues

Locked Box mechanism

  • Rationale for Locked Box
  • Use and application of Locked Box
  • Key elements & timeline of the Locked Box mechanism
  • Buyer risks and how to mitigate them
    • Leakage
    • Deterioration in trade
    • Adverse movements in the balance sheet
    • ‘Unreliable’ Locked Box balance sheet
  • Seller risks and how to mitigate them
    • Need to produce (pay for) recent and reliable RDBS
    • Loss of value in the Locked Box period
  • Key areas of negotiation
    • Leakage vs Permitted Leakage (potential traps)
    • Choosing the Locked Box balance sheet date (considerations)
    • Choosing the value accrual (interest, profits, cash)
  • Pros and Cons of Locked Box
    • Seller issues
    • Buyer issues
  • Considerations which determine whether & when to use a Locked Box mechanism
  • CASE: Identifying the key aspects affecting the reconciliation from Enterprise to Equity Value; techniques for estimating average and normalised working capital

Part Two

Value Leakage: Reps, Warranties, Disclosure & Indemnities

  • Reps and warranties – what’s the difference & why it matters?
  • Warranties
    • Rationale for warranties
    • The main areas of risk
    • Calculating the basis of damages (the UK vs civil law)
  • Disclosure – general tactics
    • Interaction of disclosure with the warranties
    • Using disclosure to identify/mitigate risk
    • The disclosure “standard”
    • Dangers of too aggressive disclosure
    • How buyers should respond to disclosure
  • Indemnities
    • Avoiding traps for unwary buyers
    • Key issues for Sellers

Tactics for limiting Seller’s liability and value leakage

  • Time limits for notifying claims & bringing claims
  • Financial limits – what’s market
    • The overall cap on liability – coverage (warranties, indemnities, tax?)
    • de minimis exclusions
    • Tipping baskets vs. Deductible baskets
  • Buyer’s knowledge – key negotiating issues
    • Matters stated in the Disclosure letter / data room
    • Buyer’s knowledge from other sources
  • Seller’s ‘knowledge/awareness’ qualifiers
    • What does ‘Knowledge’ mean?
    • Scope of Seller’s ‘deemed’ knowledge
  • Onerous (warranty) notification requirements
    • What is reasonable – Seller vs buyer approach
    • Potential traps in cross-border deals

Warranty Insurance - A Powerful Negotiating Tool

  • The rapid evolution of the market in Europe
  • Seller vs buyer policies – key differences, pricing, and typical terms
  • Interaction with the warranties
  • How buy-side policies can help the seller
  • Where sell-side policies can provide leverage
  • Recent developments – fees, coverage

Bridging the “Value Gap” on price

  • Cash
    • Potential pitfalls for buyers
    • Potential pitfalls for sellers
  • Shares (listed)
    • Use and application
    • Problems areas: market price, caps & collars
    • Other pitfalls & how to avoid them (Liquidity & the ‘free float’)
  • Vendor loans
    • An effective tool to bridge the value gap
    • Advantages for buyers
    • Problems for sellers
  • Consultancy agreements
    • When to use them
  • Service agreements - Where and how they can help
  • Contingent value rights
  • Stub equity – when to use it and why

Earn-outsA tool for Value Arbitrage

  • Anatomy of an earn-out
    • Time element
    • The benchmark
    • Other milestones
  • Selecting the most appropriate benchmark
    • Financial benchmarks – pros and cons
    • Other industry specific benchmarks (real estate, renewables, life sciences, TMT)
    • Dealing with buyer-generated benefits
  • Payment frequency – bullet vs milestone payments
  • Methods of mitigating targets / benchmarks affected by Covid-type issues
  • Dealing with early termination of the earn-out
  • Handling vendors who leave” early”
  • Typical pitfalls for the seller

Managing conflicts with managers (who are not the owners)

  • Identifying the two major potential landmines which can derail the deal
    • Conflicts of interest – the owners vs the managers
    • Managing the information ‘flow’ to potential buyers
  • “Conflicts of interest” (Ensuring management don’t highjack or sabotage the deal)
    • The three 3 scenarios and Strategies for managing them
    • Sweetheart deals - “typical” terms
    • Other strategies for handling stubborn management
  • Managing the flow of information to avoid hiccups
    • The danger of visits to the target’s offices/factories
    • Reverse warranties & side letters – do they work?
    • Tactics for minimising seller’s risk
  • CASE: Identifying the key issues in a tricky disposal, discussing how best to negotiate these with the other side and deriving the optimum deal structure in order to resolve the key issues to the benefit of both buyer & seller

Please be advised that there is some content overlap between this course & our 'Sale and Purchase Agreements' & 'Advanced Financial Issues in Acquisition Agreements' courses. If you are looking to book onto one or more of these courses we would advise contacting us for to discuss which combination of courses would be recommended.

Redcliffe’s M&A negotiation course trainer is a consultant, public speaker and author with expertise in private equity, debt advisory, restructuring and infrastructure. He is a Senior Advisor to KPMG Finland, a Senior Advisor to Reorg EMEA Covenants, the leading provider of information to the European High Yield community, and a Senior Consultant to Grant Thornton UK.

Training programmes are provided to a wide range of blue-chip clients in Europe, Africa, the Middle and Far East, North America and Australasia. In-house clients include banks (BNP Paribas, Société Générale, ING, Barclays Capital, Bank of China, RBS, SEB); lawyers (Baker & McKenzie, Skadden Arps, Sullivan & Cromwell, Cadwalader, Latham & Watkins, Weil, White & Case); advisory firms (Lazard, PWC, M&A International, KPMG, EY, Deloitte); PE firms (Cinven, Advent, Barings Asia, Waterland); corporates (Siemens, Airbus, Turkcell, Candy Crush, Gunvor, Statkraft) and governmental bodies (the UKLA, the EBRD, the ECGD, Omani Oil Corp.)

He qualified in South Africa both as a Chartered Accountant, with Deloitte, and as a lawyer with Hofmeyr where he was involved in structuring a number of high-profile project financings including BMW 3 Series, Ford Sierra, GM, Sappi and Mondi.

When he moved to London and joined Lazard Brothers as a corporate finance executive he was involved in a wide range of public and private transactions. Subsequently he joined Hoare Govett as an assistant director where he acted as an advisor to smaller listed companies and was involved in several syndicated Euro-Equity Initial Public Offerings.

In 1991 he joined ABN Amro’s cross border M&A team prior to being transferred to MeesPierson Corporate Finance as a Director in Cross-Border M&A where he was also involved in a number of deals in Central Europe. During this time, he was a member of the EU-PHARE programme and advised the Estonian government on their privatisation programme.

He is the Programme Director at the City Business School, London, for Infrastructure Finance for the M. Sc. programme in Business Administration and Finance.

He is a member of the Institute of Chartered Accountants in England & Wales and the South African Institute of Chartered Accountants. He completed a BA and an LLB at the University of Natal and a B. Compt. (Hons) at UNISA.


  • Effective negotiating strategies and tactics –There is no one strategy that works in M&A but rather a range of strategies and tactics that are driven by the respective parties’ objectives. The appropriate strategy or tactic will depend on the importance of the issue being negotiated hence it is important to prioritise the various issues that will arise during the deal and apply the appropriate strategy to that issue
  • The politics of the deal (Managing the various players) – a simplistic view of M&A is that it’s a case of buyer vs seller but the reality is more complex as the parties need to manage a wide range of actors (buyer, seller, lawyers, accountants and corporate finance). The programme provides guidance on these issues and strategies on managing the main parties and also their advisors. Unsophisticated sellers (& their advisors) pose particular challenges as do unreasonable players & the programme provides guidance on how to navigate these challenges
  • Managing ‘management’ conflicts – managers with no equity stake can sabotage or highjack the sale process. The programme identifies these risks and provides strategies on risk mitigation
  • Differentiating the buyer’s offer – in a competitive situation, buyers need to find an edge to get to pole position and close the deal. The programme discusses various strategies on how to achieve this
  • The Equity Bridge (reconciling Enterprise to Equity Value) – the ‘Cash free / Debt free‘ concept seems simple enough but the devil is in the detail. Inexperienced parties can gain (or lose) value by failing to understand the nuances in the components of debt (& cash)
  • The Working Capital delta – negotiating the working capital ‘Peg/Target’ is another aspect where the parties can surrender (or gain) material value. Buyers face an additional challenge post-closing of they have failed to acquire the target with an appropriate level of working capital. The programme reviews some of the common pitfalls in using ‘average’ or ‘normalised’ working capital and how to mitigate typical risks
  • Completion Accounts or Locked Box – each mechanism has its pros and cons. The programme covers the key areas of negotiation and the aspects which can trip up buyers & sellers
  • Value erosion mitigation – sellers have a variety of ways of limiting value erosion under warranty (& indemnity) claims post-closing. The programme reviews the various methods and highlights the key traps for unwary buyers
  • Warranty insurance – this has developed as an increasingly viable method of mitigating seller’s liability in many jurisdictions and is gaining traction globally. The programme reviews when, where and how to use this to best effect
  • Bridging the Value Gap - often the key issue in getting the deal through. The programme reviews the various methods of closing this gap, the pros and cons of each of the primary ways of achieving this together with some additional methods of reconciling the parties
  • Devising effective, bulletproof Earn-outs – often one of the most challenging aspects to negotiate but also a source of dispute post-closing. The programme provides guidance on the key issues, from the seller and buyer’s perspective, and how to mitigate the risks of dispute post-closing
  • Using ESG as a negotiating tool? – ESG has become increasingly important to Private Equity & Listed companies since their investors. For unlisted corporates, ESG principles now assume greater impact on their financing options since banks are increasingly reluctant (or even unable in some jurisdictions) to lend to firms unless they can demonstrate compliance with ESG and a strategy to reduce emissions

  • The trainer has over 40 years’ experience in M&A, covering private and public deals
  • His experience of M&A covers a wide range of regions, including the UK, Europe, the US, Asia and Africa
  • The trainer is still active in the M&A market through his various consultancies and is conversant of the current trends in the M&A market
  • He has been involved in over 20 earn-outs
  • Through presenting to clients involved in different aspects of M&A and M&A negotiation (advisers, Transaction services/DD, Investment Banks and lawyers) he gains exposure to different aspects of the M&A process

This advanced negotiation issues in M&A course is a ‘must know’ for professionals involved directly in the M&A process, including:

  • corporate finance advisors;
  • in-house M&A;
  • commercial lawyers;
  • accountants providing due diligence/VDD;
  • owner/managers;
  • private Equity practitioners;
  • private wealth advisors involved in M&A

And a ‘nice to know’ for;

  • Lawyers in banking;
  • lenders / providers of debt finance for acquisitions;
  • professionals in strategy or business development;
  • professionals providing support services to M&A;
  • providers of warranty insurance;
  • fund of fund professionals;
  • marketing teams;
  • HR/People management;
  • directors on corporate boards (not in M&A)
  • ESG professionals requiring greater insight into M&A processes

Redcliffe’s interactive M&A negotiation course is aimed at those with a working knowledge of the M&A process. It focuses on negotiating the key commercial aspects of the transaction which impacts value for both buyer and seller and on creating the right framework and strategy for enhancing value for the seller or retaining value for the buyer.

The simplistic view of M&A is that it is a bilateral process between buyers and sellers. Experienced practitioners understand it is an organic process, which involves multilateral negotiations between buyers/sellers on the one hand, and their respective advisers on the other hand. Additionally, there are critical negotiating issues that arise, in parallel, between the parties, their own advisors and between the advisors themselves (e.g. accountants debating the completion accounts, lawyers debating warranties in the SPA).

To complicate matters, there are significant differences in approach between different types of sellers and buyers. For example, corporates have a different agenda to PE firms whilst owner/managers, who invariably lack experience in M&A, often represent the biggest challenge. Last, the seller’s management can also have a malign influence on the sale process which requires delicate handling.

The programme is divided into two parts. The first part focuses on the soft negotiating issues which are common to smaller deals but less relevant in larger auctions. The second part focuses on the technical or commercial aspects where the real value can be gained or lost. These include the completion mechanisms (completion accounts and locked box), the offer structure (e.g. cash free-debt free and working capital adjustment), structuring the consideration, handling management and value leakage through the warranties, disclosure and indemnities.

Finally, warranty insurance, long seen as an expensive and cosmetic solution, is experiencing rapid acceptance in Europe and, increasingly, has emerged as a powerful negotiating tool.  Last, the programme reviews various solutions to closing the “value gap” between the parties and the pros and cons of the various methods of achieving this.

Please note that this M&A negotiations course covers some aspects that are also covered on the Sale & Purchase Agreements course, although the focus in this programme is on commercial aspects as opposed to a more legalistic approach in the SPA course.

  • The trainer was very engaged and enthusiastic about the topics and had very good knowledge.
  • The instructor was experienced and friendly, the material had a clear structure and there was a chance to ask questions.
  • The trainer was evidently well experienced and had a good use of examples. 
  • For me the main highlights were the differentiation between completion accounts and locked box, the importance of accountancy policies, earn outs, the treatment of representations and warranties, as well as the overall elaboration on the way a seller and a buyer should navigate their interests.
  • The course was very informative covering multiple technical aspects of the deal and the ability to negotiate these various aspects. Accordingly, this is directly applicable to a career in M&A and has a number of practical uses.
  • The training course gave me good insight into common issues and solutions to those problems when advising our clients in M&A transactions. It also gave good examples of how to structure deals to benefit either the buyer and seller which was a useful takeaway for me and something I will use in the future.
  • The trainer is a great trainer, he brought the slides to life and gave great insights and examples of how his own experiences applied to the situations that he was presenting.
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Part 1

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