Negotiate and close
Founders sell once. Buyers buy regularly. The asymmetry shows up in every clause — earn-outs, escrow, warranties, working-capital adjustments. Have someone on your side who has been here before.
What this step covers
- LOI: hold ground on price, structure, and exclusivity terms.
- Manage diligence to protect the deal price — no surprise findings.
- SPA: warranties, indemnities, earn-out, and the completion-accounts mechanism.
The detail
Where founders give up value in negotiation
- Soft on price in the LOI to 'get to exclusivity', then locked in.
- Open-ended warranty cap (should be 25–50% of price, not 100%).
- Long warranty survival period (12–24 months is standard; 5 years is hostile).
- Vague earn-out targets the buyer can manipulate after closing.
- Working-capital target set against a stale balance-sheet date.
- Specific indemnities for risks that are already in the warranties (paid for twice).
Structure terms that protect the seller
- Warranty cap ≤ 50% of price, with a de minimis threshold.
- Warranty survival 12–18 months (longer only for tax / title).
- Escrow capped, with clear release schedule.
- Earn-out tied to metrics you control, with audit rights.
- Non-compete proportionate (2–3 years, defined geography).
- Tax-efficient consideration structure (share sale vs asset sale).
Engage a deal advisor + transaction lawyer together. The two roles are complementary — the advisor protects commercial value, the lawyer protects legal exposure. Hiring only one usually costs you the other.
Frequently asked
Share sale or asset sale?+
Share sales are usually more tax-efficient for the seller (capital gains tax at 15%) but transfer all liabilities. Asset sales leave liabilities behind but trigger income tax + VAT on the assets. Take advice early.
How long does negotiation typically take?+
From LOI to signing: 60–120 days. From signing to completion: another 30–60 days depending on conditions precedent.
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.
