The Exit Toolkit · Sheet 9 of 20
The seller's negotiation map
The terms that really move value
Warranties
Legal promises about the state of the business. Always the most negotiated part of the deal. Fewer and narrower is better for you.
Limitations on claims
Your protection: an overall cap on liability, minimum claim thresholds, time limits for claims, and a requirement that the buyer exhausts other remedies first.
Indemnities and the tax covenant
Pound-for-pound compensation for specific known risks, plus a covenant covering pre-sale tax. Resist indemnities for vague or unknowable matters.
Deferred payment and earn-out terms
How much is truly guaranteed, what security you hold, exactly how earn-out targets are measured, and what obligations the buyer has to support performance.
Completion accounts and working capital
The adjustment mechanism that moves the final price. Agree the accounting policies and targets precisely.
Restrictive covenants
How long you are kept out of the market, and how widely. Two to three years is common; make sure the scope matches reality.
Your ongoing role
If you are staying on: on what terms, for how long, with what responsibilities. Going from boss to employee is harder than most sellers expect.
Bottom line
The buyer generally has the upper hand once exclusivity is signed. Your leverage is greatest while there are still other bidders, so nail these points early.
General information only, not legal advice. Steven Mather Solicitor is a trading name of Kesters Nook Limited; legal work is carried out through Nexa Law Limited, authorised and regulated by the SRA (number 633024).