From the observer’s perspective, it’s impossible to know when you’re the stalking horse and when revisions are legitimate. Reflect on negotiations to this point and the seller’s behavior and consider the following.

1. Maintain Discipline and Pace

Whatever you’ve gained through negotiations is poorly reflected in the final agreement. The technical side of M&A isn’t glamorous but it's where many battles are won or lost. Even if you’re weary, force yourself to rest, to reflect, and resist the temptation to let the other side win or ‘add it to goodwill’. To paraphrase advice given from Warren Buffet; Write down the reason you are buying a company and your best price.  Write down "I am buying Microsoft at $300 billion because..." Force yourself to write this down. It clarifies your mind and discipline. If the seller asks for new terms or a purchase price you cannot afford, be prepared to walk away and pursue another (and likely better) deal.

2. Create Urgency

If not managed, negotiations may fill the time available. Most people do not like to make important decisions under pressure but search funds have limited time and a deadline may provide a healthy motivator. Avoid getting bogged down in never-ending negotiations, consider imposing a deadline at the beginning of negotiations. The deadline can always be adjusted given the circumstances and shared commitment. But, beware “exploding offers” can backfire and should be used sparingly. You can always use your investors as the “bad guys” in a given deal and position yourself more as the “middleman,” where you express to the seller that you are doing all that you can, but your investors are losing patience with the slow pace of the deal. There is a reason that car dealerships adopt this same approach.

3. Negotiate Multiple Terms Simultaneously

Parallel work streams is a great tactic to discover the interests of reticent sellers, and to appear flexible and empathetic. Identify and present the price and terms up front and put everything on the table at the same time. Then, go back and forth between the issues as you make offers and counteroffers. Doing so allows you to get information regarding the seller’s priorities and signals that you are interested in understanding and accommodating their needs. Coupling an “ask” with a “give” can position you effectively and maintain goodwill. Negotiating terms piecemeal can lead to a subpar result.

4. Collaborate with your Attorneys

Your attorneys know the limits of their responsibilities.  While their job is to protect your and your investor's best interests, it ultimately falls to you to determine which risks are acceptable. Prepare them as best you can to ensure an efficient deal. One investor always asks his lawyer to take off his “lawyer hat” for a moment and pretend that the lawyer is also investing and what their evaluation of the risk is. Doing so can help your lawyer provide you with more reasonable feedback and convey whether certain things are severe enough that you should walk away from the deal. Every deal has some risk, and no matter what you do, you can never eliminate all risks through a legal agreement.

Resist the temptation to craft and agree to language before consulting your attorney. In general, it's wise and a better use of time and money to ask your attorneys to craft the agreement and provisions rather than seek their help to rewrite the content. Lawyers should be consulted at the LOI stage. Because you have control over your attorneys, you can and should tell them what terms and/or risks are acceptable, and what is required versus those that can be negotiated.

For example, a rescheduling provision is customary and should be included should a negotiation conflict arise. If conflicts seem unlikely, it may be sufficient to stipulate that the new date will be at a ‘mutually agreeable time’ rather than creating a cumbersome procedure.

5. Maintain Optionality

At the end of the negotiation, ‘post-closing’ matters and customary provisions governing renewals and third-party consents may be deal breakers. For instance, if a company’s agreements with its customers or vendors do not allow for a change of control, then third-party consents will not be granted which effectively will legally block the transaction. For this reason, pay special attention to exit clauses to ensure you can recuse yourself should the seller’s representations turn out to be false.