The Scoop On Negotiating Strategies When Buying Or Selling A Business! Negotiating Strategies When Buying Or Selling A Business
The Scoop On Negotiating Strategies When Buying Or Selling A Business!

In a recent blog post I had a bullet point that indicated everything is negotiable when buying a business. It still amazes me how many deals fail to get done simply because the parties lack negotiating experience.

Often, inexperienced business buyers and sellers have an incorrect interpretation altogether as to what a negotiation entails. Negotiating is not arguing or fighting, or drawing lines in the sand, or the worst one of all, when one side claims that a particular issue is a “deal-breaker”. These approaches, or better yet attitudes, are sheer nonsense and by adopting any of them you will put yourself at a huge disadvantage to ever get a deal done.

Negotiation is an art and something that anyone can learn.

But for those who lack hands- on experience, whether you are buying or selling a business, there are some critical points that they must adhere to including:

Choose your battles: There is always a wealth of issues to be negotiated during this process – not every one is critical, or rather, some are more important than others. Certain issues are just not worth fighting about relative to what the ultimate goal is (to get a good deal done) or in comparison to other important matters where you need to take a hard stand.

The “line-in-the-sand” position:

If you take the approach that a particular issue is a deal-breaker if the other side does not give in, you cannot adjust your position.

That is why it can be a terrible strategy to adopt. Yes, of course, there can be a few points where you do not acquiesce, but understand that if you adopt a hard line, no bending position on a point, if you then cave in, you will never be taken seriously on any other issues where you adopt this approach.

It is okay to revisit issues: As mentioned earlier,

there are numerous points to be negotiated and sometimes, as you learn more about the business and the deal evolves, prior points that were agreed upon may no longer make sense.

As such, it is fine to revisit these points but only if new information alters what was originally agreed upon and not simply because you want to open up previously resolved matters since your ego may have been hurt.

Get people to the table: When big issues must be addressed avoid email. It is difficult to retract the written word. Plus, people are generally much bolder hiding behind written communication than they are in person.

Get the parties on the phone, or better yet, meet in person to address the key points that are hindering the consummation of a deal.

What they bring up last is usually the most important: My good friend Robert Verna once told me that whatever it is that the other side in a transaction wants to really discuss is typically the one they bring up last and I have found him to be correct in nearly every situation. As such,

when negotiating, take the tact of first listening to and understanding the other party’s position on all the issues.

You do not have to commit to anything immediately. Some people believe that if they do so it demonstrates how smart and assured they are and that is not so. Instead, digest everything and then decide upon your position once you know all of the points. This way,
you can prioritize what is truly important, give in on those points that do not impact the deal very much, and continue to work in a comfortable environment with the other side to get to the finish line.

I fundamentally believe there is a resolution to every single issue during the business for sale process. In the end, it comes down to the buyer and seller. If the spirit is there to get a deal done, there is no situation, problem, obstacle or challenge that cannot be overcome. It is simply a matter of wanting to see it through. Obviously, there are cases where the circumstances are too grave to even consider continuing with the deal, and so these are the ones where you have to walk from the deal, but overall, that is the exception and not the rule.

Here is a link to learn more about negotiating a business purchase.

Have a great week.



This article represents a fraction of what you’ll learn on this topic in the How To Buy A Good Business At A Great Price© series - the most widely used reference resource and strategy guide for buying a business. To learn more click here

Recent Posts
When Should You Include Earnouts In Your Offer To Buy A Business?

Earnouts can be a very effective condition to an offer when buying a business however, they don’t apply to every business for sale. So what exactly are earnouts and when should

Continue Reading >
Negotiating When Buying A Business For Sale

It's important to gauge the type of mentality a seller has about negotiating before you start the actual negotiations when buying a business for sale. Similarly, a buyer has to und

Continue Reading >
How Long Should The Seller Stay On After You Buy A Business?

Keeping the seller onboard for a reasonable and effective transition period can be the difference between success and failure for a business buyer to be certain the business gets o

Continue Reading >
Site By Consult PR
© Diomo Corporation. All rights reserved