Negotiation Tactics For a Business Sale

Negotiation can evoke a range of feelings. Some people enjoy the banter back and forth while others dread the process. Most people fall somewhere in between. Regardless of your stance, the goal remains the same: emerge successfully from the negotiation. Here are four negotiation strategies that consistently close more deals.

Leverage the experts

A common belief is that you should never negotiate your own deal. Business owners are often too emotionally invested in their businesses, which can cloud their judgment. Buyers can become just as emotionally attached. Engaging a professional business broker or M&A advisor is a strategic move toward a favorable outcome. A professional broker not only knows what constitutes a fair price but also understands the many factors that influence the negotiation.

Take it or leave it

Another approach is the “take it or leave it” strategy. The buyer presents their offer, the seller makes a counter-offer, and then the negotiation ends. The seller holds their position and hopes for the best.

This carries real risk, since showing some flexibility often leads to a successful deal instead. It can also have high reward. An experienced broker can assess whether this strategy fits, based on factors like how appealing the business will be to future buyers if this one walks.

Addressing variables

A third approach focuses on the variables that matter most to both sides. Understanding what each party actually needs, not just what they say they want, is often the key to a successful deal. The key issues are not always financial. They might include a commitment to retaining key employees or finding a way to engage the seller in a consulting agreement, post close. Recognizing the full complexity of the deal, not just the price, makes for a smoother negotiation.

Reaching a compromise

Finally, consider splitting the difference. Both buyers and sellers need to avoid letting ego derail the deal. Quibbling over minor differences in a multi-million-dollar transaction is usually counterproductive.

Knowing an expected sales price range in advance of a listing allows room for small reductions that still achieve the seller’s goals.

Every business, buyer, and seller is unique, and each deal presents its own challenges. A skilled broker or advisor evaluates each situation on its own merits rather than forcing it through a rigid formula.

If you want to explore the possibility of selling your business, reach out.

Mark Herrmann is the founder of Trustmark Mergers & Acquisitions in Charlotte, North Carolina. This article is general information, not legal, tax, or financial advice.