There is lots of information out there on how to negotiate in business, but nothing specific to buying and selling businesses, so we thought we would share with you some of our key tips and tricks that we teach our personal clients that you may not have considered before especially when it comes to buying or selling a business.
These are some of the key tips that we have noticed over the years that if people get wrong then 9 times out of 10 the business deal will tip over (not proceed). So if you have any interest whatsoever in buying or selling a business pay close attention!
Note that we write here from the point of view of someone selling a business, but the same tips apply equally if you were a buyer of a business.
Tip #1: Keep the business negotiations as simple as possible at first.
Hand in hand with this is make sure you leave the toughest issues until last. A successful business sale is all about a series of steps (sometimes even milestones!) to each new level. We like to describe this as “foot in the door” to the next point in the sale and negotiations. You dont want to get stalled on one particular issue at the start of the negotiations, and you also dont want to confuse the buyer, because “a confused mind says no”. You want lots of little “yeses” to lead the buyer through each step of the sale process leading up to the big yes at the end. Make sure your initial ideas and solutions are simple and easy to understand, and always cover the minor issues first so you get momentum going in favour of agreement.
Tip #2: Always Develop Multiple Solutions.
Having lots of solutions to resolve problems can keep a stalling business negotiation going. Ideally, get the buyer to be actively involved in coming up with these solutions and brainstorm with advisors and associates until all possible solutions are explored.
Tip #3: Be flexible but ask for concessions
Hopefully this is self explanatory, but we want to point this out to you because this is an area where we often see business owners fall down when it comes to selling their business. They are not prepared to be flexible at all -which more often than not leads to the entire sale tipping over. It is amazing how often they just dont get this! A buyer can all too easily walk away from a sale and 9 times out of 10 they will do exactly this if the seller is not flexible in some way.
Now a very important point here is that we are not saying to go over the top and give everything away. If you do give in on something in the negotiations then make sure you ask for a concession in return! What we are talking about here is the age old negotiation technique of “Give and Take”. For example, a buyer may insist that they are not prepared to pay for stock older than 1 year old, then you can counter with “ thats fine but if you wont pay me for that stock then I can take it and keep trading with it until it is all sold”
There is clearly a lot more inside business broker tips to negotiations of a business sale. In our e-mentoring course we go into a lot more depth on business negotiations and go through in detail the exact details we teach our personal clients who we help sell their businesses. If you dont get the important skill of business negotiation right, especially when buying and/or selling businesses the deal will most likely tip over (not proceed). It is the number one reason that we see business exit deals tip over, so if you are serious about buying or selling a business take the time to learn how to negotiate effectively – it can literally make you $$$ Millions!