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From the monthly archives: May 2016

We are pleased to present below all posts archived in 'May 2016'. If you still can't find what you are looking for, try using the search box.

Why Deals Fall Apart — Loss Of Momentum

Deals fall apart for many reasons – some reasonable, others unreasonable.

For example:

  • The seller doesn’t have all his financials up to date.
  • The seller doesn’t have his legal/environmental/administrative affairs up to date.
  • The buyer can’t come up with the necessary financing.
  • The well known “surprise” surfaces causing the deal to fall apart.

The list could go on and on and this subject has been covered many times. However, there are more hidden reasons that threaten to end a deal usually half to three-quarters of the way to closing. These hidden reasons silently lead to a lack of or loss of momentum.

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The 3 Ways To Negotiate

There are three major negotiation methods.

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.  The buyer may want to move the business.

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.

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