Selling a company is about far more than price
When people talk about mergers and acquisitions (M&A), most headlines only highlight the deal value. But anyone who has been through the process knows that what really defines the owner's net result is not the announced price, but the contract clauses and the deal terms. Below, besides explaining the main contractual mechanisms, I share practical examples of how each of them can turn a multimillion deal into a good or a terrible one.
Examples of shareholders' agreement clauses
Right of first refusal
Picture a group of partners in a food manufacturer. One of them wanted to sell his stake to a foreign investor. Thanks to the right of first refusal, the existing partners were able to buy that stake first and avoided losing strategic control of the business. Without it, they could have ended up with an "unwanted partner" who would change the company's direction.
Tag along
In a tech company that sold control to an international fund, the minority shareholders were able to sell their shares at the same price paid to the controlling shareholder. That "100% tag along" was crucial to guarantee liquidity and fairness. Where there is no tag along, minority shareholders can get stuck in a company run by a new owner, with no liquidity and no voice.
Drag along
A venture capital fund received an offer for 100% of a logistics startup. Some minority shareholders did not want to sell, but the drag along clause required everyone to follow the decision. The result: liquidity for all shareholders, even though some would rather have stayed. This is common when funds exit.
Dividend policy
There have been cases where institutional investors demanded a minimum dividend payout to secure their return, while the founders wanted to reinvest everything in growth. The lack of a clear clause created conflict and delayed the company's expansion. When the policy is well defined from the start, a lot of friction is avoided.
M&A deal terms: where value really changes
Price adjustments
A classic case: an industrial company was sold for R$ 200 million. At closing, however, working capital turned out to be below the agreed level. Result: the buyer demanded a R$ 20 million adjustment. The announced price did not reflect what the seller actually received.
Earn-out
In a chain of clinics, part of the payment depended on revenue growth over two years. The problem: the calculation criteria were not well defined. Disagreements arose over which revenues should count, leading to litigation between seller and buyer. The lesson is clear: an earn-out only works when the metrics are spelled out in great detail.
Representations, warranties and indemnities
In a food sector deal, after closing, the buyer discovered a significant labor liability. Because there was a warranty clause, part of the payment held in an escrow account was used to cover the contingency. Without that structure, the buyer would have borne it alone, or ended up in a lawsuit against the seller.
Escrow account
In another example, 10% of the deal value was held in an escrow account for 18 months. That gave the buyer the confidence to move forward, but it also required patience from the seller: part of his money was only released after the holding period.
Non-compete clause
An entrepreneur in the beverage sector sold his brand but launched another with similar products in less than a year. Since there was no robust non-compete clause, the buyer quickly lost part of the market to the same founder. Since then, this type of clause has become standard in practically every deal.
What these examples teach us
These situations show that the contract is as important as the price. A R$ 100 million deal may net the seller only R$ 70 million if he is not prepared for adjustments, holdbacks and contingencies. An owner who understands (or surrounds himself with people who understand) corporate governance, due diligence and contract structuring comes to the negotiating table much stronger. This reduces risk, increases predictability and ensures the deal delivers real value, not just headlines.
Negotiating the sale of a company is not only about "how much it is worth", but about how, when and on what conditions that value will be received. Clauses such as tag along, drag along, earn-out, escrow and non-compete can completely change the outcome. That is why owners thinking about raising capital, bringing in a fund as a partner or selling their business need to see these details as an essential part of the strategy. Price is only the beginning: what really closes the deal is the quality of the contract.
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