The Red Lines to Set Before the First Offer, Not During the Negotiation
A single page, written before any buyer has said a number, stating what you will refuse whatever you are offered: that is what this list helps you draft, while it is still easy to do.
The day you discover your own limits is rarely well chosen. Picture a transport and logistics company of 45 people in the canton of Vaud. After three months of talks, the founder receives an offer 20% above what he hoped for, tied to closing the Payerne depot within two years; a hypothetical case, not a client. He had never said that this depot mattered to him. He says it that evening to his family, and the next day to the buyer, who concludes that more conditions will follow. Mandate after mandate, I see the same thing: a red line that appears in the middle of a negotiation costs more than one set at the start, because it arrives without credibility, and often without anything in return.
On the money
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A net floor price, not a headline price. The number that counts is what is left after tax, after repaying the debts and shareholder accounts the buyer takes over, and without the part you do not receive at once. Have your fiduciary calculate it before any discussion, and write it down: below it, you do not sell, whatever multiple is quoted.
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The share of the price you accept not to receive at closing. Earn-out, vendor loan, shares in the acquiring company: each of these instruments defers a fraction of the price and makes it depend on someone else. Set a maximum share, often between a fifth and a third, and a maximum duration, rarely beyond three years. What you accept inside those limits is negotiable; the limits themselves are not.
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The cap on what you will warrant. Seller warranties are signed at the end of the road, when fatigue makes everything acceptable. Decide now on the cap as a percentage of the price, on the period after which nothing more can be claimed from you, and on the amount you will leave sitting in escrow.
On you
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How long you stay, and in what role. Six months of handover is not three years of employment under someone else's orders. Write down the duration you can live with and the role you accept: handing over key relationships, yes; still running the company, with a title and without the powers, is a different question.
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What you will not do during that period. Announcing the redundancies the buyer decided, carrying a price increase you did not want to your clients, having no say in the message given to staff: three tasks that sellers discover in their post-closing employment contract. Name in advance the ones you refuse.
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The scope of non-compete you can accept. Duration, territory, activities: a clause drawn too wide forbids the advisory mandate or the minority stake you had in mind for afterwards. Set what must remain possible, before you are shown the standard wording.
On the company and its people
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The people whose situation must be settled before signing. The production manager who has worked with you for twenty years, the part-time bookkeeper, the family member on the payroll: for each, decide what you require, a confirmed contract, a retention bonus or a negotiated exit date, and what you leave to the buyer. An employment commitment beyond twelve to twenty-four months is rarely negotiated, and even more rarely enforced.
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The site, the name, the brand. A strategic buyer may have good reasons to close your site or retire your name within three years. If that is a red line for you, say so to yourself first: it rules out an entire category of buyers, and better to rule it out before you have let it into your books. If it is only a preference, keep it off the page.
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The property. Selling the walls with the company, or keeping them and signing a long lease: this decision changes the price, the tax and the nature of your income after the sale. It is taken with your fiduciary, not in passing in a letter of intent where the buyer offers to "take over everything".
On the process
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The maximum length of an exclusivity. A serious buyer asks for exclusivity before committing to due diligence costs, and that is legitimate; an exclusivity without a written indicative price or without an end date is not. Set your maximum, often six to ten weeks, and require that it starts only with a letter of intent that carries a price and the method behind it.
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What makes you leave the table. A price cut after due diligence without a documented new fact, a change of counterpart that reopens what was settled, a third extension of the timetable: decide now which of these ends the discussion, because on the day it happens, you will be too tired to decide it calmly.
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Who keeps the page. A red line that only you know about is an intention. Hand the list to the body that runs the process for you, with the instruction to remind you of it on the day you are tempted to cross it. It is also that body's job to present it to the buyer, at the right moment and in the right terms.
Three tests, for every line on the page. First: is there a consequence if it is crossed? If you would carry on negotiating anyway, it is not a red line but a preference, to be filed in another column. Second: does the line hold if the offer is 20% higher than expected? A limit that gives way to a better price was a price. Third: does your spouse or partner know it? The limits never spoken at home are the ones that surface most violently at the end of a negotiation.
A page that passes these three tests rarely has more than five or six lines. That is little, and that is the point: a buyer who receives a short, stable list early treats it as a frame; a seller who discovers a new one every week ends up believed on none. In hindsight, lines set in advance are rarely invoked. The buyer reads them in the way you run the first weeks, and builds the offer around them.