Negotiate and close
Between LOI and signing is where deals quietly fall apart — or quietly get repriced against the buyer. Run a tight process or expect to leak both value and time.
What this step covers
- LOI: price, structure, exclusivity, conditions, timeline.
- Due diligence: managed checklist, findings log, price adjustments.
- SPA: warranties, indemnities, escrow, earn-out, completion accounts.
The detail
The deal documents in order
- Heads of Terms / LOI — price, structure, exclusivity, conditions, timeline.
- Due diligence reports — legal, financial, tax, commercial.
- Sale & Purchase Agreement (SPA) — warranties, indemnities, completion mechanics.
- Disclosure Letter — every exception to the warranties.
- Transitional Services Agreement (if seller will help post-close).
- Employment / consultancy contracts for seller's continued role.
- Escrow agreement — typically 10–20% held for 12–24 months against warranty claims.
Price adjustment mechanisms
| Mechanism | How it works | Best for |
|---|---|---|
| Locked-box | Price fixed at a past balance-sheet date | Clean, mature businesses |
| Completion accounts | Adjust on day-1 balance sheet (cash, debt, working capital) | Volatile working capital |
| Earn-out | Part of price contingent on post-close performance | Bridging valuation gap |
Negotiate exclusivity in the LOI (typically 60–90 days). Without it, you'll fund diligence and find the seller closed a parallel deal.
Frequently asked
What's a typical escrow size?+
10–20% of price, held for 12–24 months. Larger if there are known tax or litigation risks.
Should the seller stay on after closing?+
Usually yes — 3 to 12 months — to transfer relationships and operational knowledge. Tie part of the consideration to the handover for alignment.
The information in this guide is provided for general guidance only and is subject to change. Fees, timelines, and regulatory requirements in Kenya are updated regularly. Before acting, please confirm details with the relevant authority (KRA, eCitizen, BRS, county government, or other regulator) or speak with a qualified MyBiashara advisor. MyBiashara is not liable for decisions made solely on the basis of this content.
