Dubbele overname, dubbele uitdaging - Hoe een ondernemer tegelijk een exit én een nieuwe start realiseerde (Bron: Johan Kemps - Kemps & Vanstraelen)

Double Acquisition, Double Challenge

How an entrepreneur managed to achieve both an exit and a fresh start at the same time

Every acquisition is different. Sometimes the biggest challenge isn’t finding a buyer or seller, but rather resolving two transactions simultaneously that influence each other.

We recently advised an entrepreneur who had been a co-shareholder of a successful service company for many years. At the same time, he wanted to launch a new business venture by acquiring another company within the same economic sector.

At first glance, the two matters appeared to be completely unrelated. In reality, the opposite turned out to be true.

After all, his withdrawal from the existing company directly determined his ability to acquire a new business.

The valuation of the shares, the financing, the timing of both transactions, and—above all—the scope of the non-compete clause turned out to be inextricably linked.

When Two Negotiations Influence Each Other

When selling shares, the focus is often exclusively on the price.

In reality, an acquisition is at least as much about the terms under which that price is paid.

In this case, the following questions, among others, were addressed:

• How is a company properly valued when the shareholders have fundamentally different views on the matter?
• Can a buyer simultaneously demand a significant price reduction and impose a very broad non-compete clause?
• For how long may an entrepreneur remain restricted in his professional activities after leaving the company?
• Which activities are actually covered by the non-compete clause and which are not?
• How do you prevent a second acquisition from being made impossible by agreements from the first transaction?

That was precisely the crux of the matter.

The Importance of the Right Negotiation Strategy

In cases like these, it’s easy to fall into the habit of approaching every discussion from a legal perspective.

Often, that’s not the best strategy.

A good negotiator first tries to understand the economic interests behind each position.

Why is the buyer asking for a broad non-compete clause?

Why does the seller want a higher valuation?

Why is part of the price being deferred?

Once these interests become clear, there is often room for creative solutions.

For example, a more limited non-compete clause can be perfectly combined with a higher price or with additional safeguards for the buyer.

An acquisition is more than just a price

Experience shows that the following elements are often just as important as the purchase price:

• payment terms;
• warranties;
• financing terms;
• competition and relationship clauses;
• communication with employees and customers;
• the entrepreneur’s role after closing;
• planning for a potential new business activity.

Those who negotiate solely on price usually miss out on a significant portion of value creation.

Five Lessons from This Case Study

1. Never focus solely on price.
2. Coordinate multiple transactions simultaneously.
3. Negotiate based on interests, not solely on legal positions.
4. Limit a non-compete clause to what is truly necessary.
5. Ensure that the new company is not burdened by agreements from the previous one.

Conclusion

Acquiring or divesting a company is rarely a purely legal exercise.

It is a combination of strategy, valuation, taxation, financing, psychology, and contracts.

That is precisely why it pays to seek specialized guidance early on. Not only to avoid conflicts, but above all to ensure that the entrepreneur can actually continue to run the business after the transaction.

Author

Johan Kemps
Partner
Legal Expert, M&A Market (UNIZO)
Kemps & Vanstraelen
Leuvensesteenweg 574
2812 Muizen (Mechelen)
0477/47.24.67
www.kemps-law.be