Private Placement Negotiation

Private Placement Negotiation

While an early-stage Technology company had identified a potential investor group to fund their business, its managers didn’t know how to react when the investors’ offer fell short of their needs, and demanded an even greater percentage of their company in return. Moreover, the investors were demanding that the founder be replaced with a different CEO.

We began by working with the client to identify deal terms for investments in similar types of companies, accounting for industry, product, stage of development, etc. Based on our analysis, we predicted that an investment in our client company would complement and enhance the investors’ portfolio in ways that few other potential investments could. We, therefore, felt that our client had a significant amount of leverage in the transaction. We also found that the client’s company valuation was supported by valuations for comparable companies, albeit at the higher end of the range. At the same time, our research indicated that the companies with similar valuations were led by more senior business people.

We turned our attention inward towards our client, with substantial efforts to reconcile the founder’s expectations with realistic expected outcomes. We focused our attention on identifying the underlying drivers and psychological factors that were at play, including goals and self-image issues.

Representing our client at the table, we closed the deal with a higher valuation than originally proposed by our client, with a smaller percentage of equity being relinquished than originally anticipated, and with a virtually-guaranteed future leadership position for the founder.t.

Other negotiation examples include:

Negotiating a Commercial Lease
Negotiating the Purchase or Sale of a Business