Having a formula and understanding the fundamentals of successful negotiation can help you make the best deal possible and avoid lost opportunities.

Negotiation may seem a daunting task, but when handled in a balanced manner, negotiation can be a positive experience rather than a negative one. The negotiation strategy should be one that results in a winning deal for both parties. It’s not about who strong-arms the other. Nor is it a game with a winner and loser. It’s a complex process for sure.

A good deal is never one-sided. Negotiation isn’t about capitulation; it’s about finding a mutually acceptable solution. If the parties can determine the factors that are most important to each, the price and the terms of the deal can be structured to meet those needs.

Are you ready for the next chapter of your business story?  For more than 50 years, Certified Business Brokers has helped thousands of owners sell their businesses, with over $1 billion in transactions closed. Whether you’re ready to sell, looking to buy, or just curious what your business is worth, our team is here to guide you from first conversation to closing. We invite you to contact us to discover how we can assist you. 

In this article, we’ll take a closer look at the vital aspects of solid negotiations, covering tips, principles and other information that can help enhance your chances for success.

10 Key Negotiation Tips to Help You Succeed

The following are some key negotiating tips. While they can’t guarantee that you will always get what you want in a negotiation situation, they will certainly enhance your chances for success.

1. Before you enter into the negotiation, you should already have determined the maximum amount you can offer based upon your personal financial situation.
2. Resolve the toughest issues first. Focus on what you absolutely need, and what you can do without.
3. Make sure your offer is realistic. You may want to get your own valuation of the business if you think the price expectation of the seller is not in line with your price determination. You’re doomed to fail before you even get a chance if your offer price is way off base in the seller’s eyes.
4. Consult with an attorney or CPA to learn about the various tax and legal ramifications of the purchase.
5. Learn as much about the selling party as you can. Why is the business being sold? What are their key needs? Are they pressured for time? Are they negotiating with anyone else?
6. While keeping it professional, don’t be afraid to get personal. The business is personal to the seller. Humanizing the other side’s priorities is just as important as understanding your own if you want to structure a winning deal.
7. Keep egos at bay. Don’t let your emotions get in the way. If frustration sets in and you’re getting a little hot under the collar, take time to cool down.  You should not take the seller’s negotiating tactic personally. 
8. Don’t get bogged down in minor details. Stay focused on your key issues. It’s easy to get sidetracked. Get the necessary information you need to move forward.
9. Focus on common interests. If negotiations seem to be faltering, isolate the issue and dig a little deeper to find the root of the problem. When there’s a will to find common ground and continue discussions, a solution can be found to mend the rift.
10. If the situation gets to the point where it seems impossible to accomplish, but you aren’t ready to give up, take time out to reassess. There may be alternative or outside-the-box strategies. An experienced business broker can often work through tough issues and get the process back on track. Discuss different scenarios with your trusted advisors before making a decision.

When you’re considering negotiations, time is also an important element to consider. It’s critical to keep the deal on track so you can have the greatest chance of success. We’ll take a closer look at timing…and why time is the killer of most deals.

Time is the Killer of Most Deals

Keeping the Process Moving and Keeping the Deal on Track Helps Seal the Pact

Many factors can bog down the sale of a business. In fact, more than purchase price or structure, time is the most likely reason that a business sale may fail.

Time can breed frustration and fatigue. As a potential sale drags on, the owner is left in an uncomfortable state of flux. The buyer may also become frustrated as fees mount. The deal can reach the point when one party declares…“It just wasn’t meant to be.”

National figures indicate that the average business sells in nine to 12 months from start to close. Once a letter of intent (LOI) has been signed, the final due diligence and closing process usually takes 30 to 90 days. 

So how do you keep the sales process moving forward?

Attentive Intermediaries

Your business broker / intermediary should be able to give you the time, attention, energy and resources necessary to focus on your deal. 

Be sure to ask your business broker or intermediary about his or her organization’s work on closing details. You want to be sure that you are working with someone who can cover minute details, looking weeks and months ahead in the sale process.

Details such as obtaining appraisals, ordering environmental investigations, transferring licenses, and completing title work must be handled properly and promptly to close a transaction. 

For the best possible results, you want to work with someone who knows the proper sequence of events so there aren’t any unnecessary delays. There’s a lot to coordinate and missing just one detail can cause a delay in closing the deal.

Transition Specialists

From your business broker / intermediary to your attorney and accountant, you want to consider hiring specialists in business transitions. Inexperienced advisors tend to be overly conservative to to protect themselves from liability. This can drag out the negotiation process and may cause frustration for the parties involved.

If you are serious about selling your business, you really don’t have the time or money to educate your advisors on the mergers & acquisitions process.

Comprehensive Overviews

Your advisor should spend the time packaging the business up front. A comprehensive business review can be developed that answers 80 to 90 percent of the standard questions a potential buyer will have. This helps both the buyer and the lender make decisions more quickly. It will also save you time because your intermediary won’t be requesting pieces of information as new buyer questions arise.

Seller Preparation

Be prepared to move forward emotionally and financially. A seller will sometimes thwart the sale because they haven’t seriously considered their future plans or their financial expectations are out of line. 

A professional advisor should be honest in what he or she believes the market can bear and should not let you go to market with an unreasonable asking price.

Buyer Screening

Finally, your intermediary should screen all buyers to ensure they are serious about the potential acquisition and have the financial means to move forward with a transaction. You don’t want to waste time with buyers who simply can’t afford a purchase. 

Selling a business can certainly be an emotional ride. It’s a time to work with deal makers and specialists who will help to minimize the stress and help everyone move forward toward the timely completion of the business sale.

Three Ways to Negotiate a Successful Business Sale

There are three major negotiation methods to bring a buyer and seller together in the business sale process. Keep in mind that negotiating means working with each other, not against each other, towards bridging the gap between the two sides.

1. Take it or Leave it

A buyer makes an offer or a seller makes a counter-offer – both sides can let the “chips fall where they may.”

2. Split the Difference

The buyer and seller, one or the other, or both, decide to split the difference between what the buyer is willing to offer and what the seller is willing to accept. A real oversimplification, but often used.

3. This for That

Both buyer and seller have to find out what is important to each. So many of these important areas are non-monetary and involve personal things such as allowing the owner’s son to continue employment with the firm. 

Or, the buyer may want extended consulting privileges with the current owner after purchase.

What Are the Keys to a “Win-Win” Situation?

There is an old adage that advises, “Never negotiate your own deal!”

The first thing both sides have to decide on is who will represent them. Will they have their attorney, their intermediary or will they go it alone? Intermediaries are a good choice for a seller. They have done it before, are good advocates for their side and they understand the company and the seller.

How do the parties get together in a win-win negotiation? 

The first step is for both sides to work with their advisors to settle on the price and deal structure positions. Both sides should be able to present their side of these issues. Which is most important – price or terms, or non-monetary items?

Information is vital. Both buyer and seller need to anticipate what is important to the other and keep that in mind when discussing the deal. The buyer and seller should do due diligence on each other. Both buyer and seller must be able to walk away from a deal that is just not going to work.

Bob Woolf, the famous sports agent said in his book, Friendly Persuasion: My Life as a Negotiator, “I never think of negotiating against anyone. I work with people to come to an agreement. Deals are put together.”

Let Certified Business Brokers Provide the Expertise You Need to Negotiate a Deal

Buying or selling a business is one of the biggest decisions you’ll ever make. There are simply too many details to navigate the process alone. We take a lot of stress out of the process by connecting serious buyers with sellers. Our network of attorneys, accountants, and lenders helps you move from first look to closing with confidence. 

Contact us today to discover how we can help you close the deal you need.