The headline says "acquired for ₹200 crore." What it doesn't say: the founder got ₹120 crore at closing, ₹40 crore sits in escrow for 18 months, ₹25 crore is an earnout tied to targets they no longer control, and ₹15 crore went to taxes and advisors. Still a great outcome — but nothing like the headline.

I have advised on buy-side and sell-side transactions for over a decade. Here is what actually happens when you sell a company, where founders lose money without realising it, and how to run the process so the headline number and the bank balance aren't strangers.

The process, honestly described

Preparation (4-8 weeks). Before any buyer sees a number, get your house in order. Clean financials, resolved litigations or at least quantified ones, key contracts assignable, cap table reconciled, tax positions documented. Every skeleton you leave in the closet gets found in diligence — and found skeletons cost more than disclosed ones, because they destroy trust along with value.

Marketing (6-10 weeks). Teaser, information memorandum, management presentations. A good advisor runs a controlled process — enough buyers for tension, not so many that confidentiality becomes a joke. In the Indian mid-market, 30-50 approaches narrowing to 3-5 serious bidders is typical.

Offers and negotiation (4-6 weeks). Indicative bids, selected bidder, exclusive negotiations. This is where valuation gets real. The highest headline bid often comes with the most aggressive terms — heavy earnouts, long escrows, broad indemnities. The best bid is the best combination of price, certainty, and terms.

Diligence (6-10 weeks). Financial, legal, tax, commercial. Two hundred to four hundred document requests. Your team will hate this phase. Push through it — diligence quality directly determines how much of the price survives to closing.

Documentation and closing (4-8 weeks). Share purchase agreement, disclosure schedules, conditions precedent, closing. The SPA is where deals are won and lost in the fine print — representations, warranties, indemnity caps, escrow mechanics.

Total: six to twelve months for a clean deal. Anyone who tells you three months either hasn't done one or is describing a distress sale.

Where founders lose money

One: no competitive tension. The single biggest value destroyer is negotiating with one buyer. A bilateral negotiation gives the buyer all the leverage on price and terms. A process with three bidders routinely delivers 15-30% more. The advisor fee — typically 1-3% — pays for itself many times over.

Two: earnouts without control. You agree to ₹40 crore extra if revenue hits ₹100 crore next year. Then the buyer "restructures" your sales team, changes the product pricing, and revenue hits ₹82 crore. Unless your SPA has operating covenants — budget authority, hiring control, definition of revenue — the earnout is a lottery ticket, not consideration.

Three: tax blindness. Share sale vs asset sale vs slump sale have wildly different tax outcomes. A ₹200 crore share sale might net ₹165 crore after LTCG; an asset sale of the same business could net ₹140 crore after corporate tax plus distribution tax. Structure the deal before you agree the price — the headline number means nothing without the tax math.

Four: working capital adjustments. The SPA will have a working capital peg — and buyers set it aggressively. Every rupee of working capital below the peg at closing comes off your price. Manage receivables and payables ruthlessly in the three months before close. This is free money most founders leave on the table.

Five: personal guarantees and non-competes. Founders routinely sign non-competes without reading the scope. Three years, all-India, "any competing business" — that can mean you can't work in your own industry until you're 50. Negotiate the scope down: narrower geography, specific activities, shorter period. Your next venture depends on it.

The one thing that matters most

If I had to pick one factor that determines deal success, it isn't valuation — it's deal certainty. A ₹180 crore offer that closes beats a ₹210 crore offer that falls apart in diligence. Buyers walk away from messy diligence far more often than from high prices.

So the best pre-sale investment isn't a fancier pitch deck. It's a diligence-ready company: clean books, documented decisions, resolved disputes, assignable contracts. That preparation is unglamorous, takes months, and is worth more than any negotiation tactic.

Questions sellers ask

Six to twelve months from signed mandate to money in the bank for a clean mid-market deal. Diligence findings, regulatory approvals, and shareholder negotiations are where time goes.

Typically a blend of DCF, comparable transactions, and EBITDA multiples. Indian mid-market deals commonly clear at 6-12x EBITDA depending on growth, margins, and defensibility. Strategic buyers pay more than financial buyers.

Carefully. Earnouts bridge valuation gaps but shift risk to you. If you accept one, negotiate operating covenants hard: budget authority, key hires, and exactly what counts as revenue.

For anything above ₹20-25 crore enterprise value, yes. Competitive tension alone typically delivers 15-30% more than bilateral negotiation — the fee pays for itself.

Usually a share sale — cleaner tax outcome (LTCG on shares) and simpler execution. Asset sales trigger corporate tax plus distribution tax, often 15-20% worse net. But buyer preferences and specific situations can flip this — get tax advice before agreeing deal structure.

Considering a sale, a merger, or just want to know what your company is worth? We'll give you an honest view — no pitch, just numbers.

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