Negotiating & Structuring The Deal

If you want to be an effective buyer, you must gain insight into the seller’s thought process, motivation, and concerns. Most stages of the business buying process are psychological because you are dealing with personalities on so many levels, and many issues are simply not black and white.

During the negotiating stage especially, understanding what makes the seller “tick” will go a long way in helping you put together a solid deal.

You cannot be expected to know the Seller’s emotions intimately, and suggesting that they undergo a psychological evaluation is not a good way to begin negotiations.

This Is An Emotional Time For Most Sellers

Consider all of the emotions that they are experiencing regardless of their reason for selling. They do have an emotional attachment to the business. They may have very strong ties to the employees, the customers and the suppliers. They are saying goodbye to a business in which they have invested much time, energy and resources. It’s a time where they are reminded that they are getting older, no matter how young they may be.

It is a situation whereby a stranger (you) is entering their “temple” and your mandate, to some extent, is to tell them all of the things that are wrong with their business, despite what they have invested and despite what they may think. Moreover, you are doing this without all of the knowledge they have about their business. For many Sellers, this whole period is not a very joyous time. Think about this for a moment. How would you be feeling?

Now, of course, you can be in discussions with a Seller who has come to grips with the sale and may have been devoting considerable time to preparing the business and themselves for it. This will make things smoother, but the emotions are still there. It is similar to, but with less impact than, a situation when someone describes the death of an individual who may have been ill for many, many years. Yes, they have tried to prepare for it, and sure it’s expected, but it’s so final!

You may come across some difficult sellers, uncooperative brokers, meddling professionals and others who seem to make the deal more difficult at every turn.

Unfortunately, it is part of the landscape however; there are a few things you can do to make yourself a better negotiator:

The “Do’s” of Negotiating

  • Be prepared – have your position ready and consider all of the possible counter comments and what your response will be.
  • Deal with the easy points first.
  • Take good notes. When you reach agreement on a point, repeat the details so everyone is clear.
  • Deal with problems quickly and effectively but not hastily.
  • Clarify complicated points. If you are not sure of something, have it explained to you until you can explain it back.
  • Leave your ego outside, check your attitude at the door.
  • When you’ve reached your absolute threshold on price, be prepared to add another 5%. It’s meaningless in the big picture, and it is not worth jeopardizing a business for this amount.
  • Go into every meeting and phone call with a wriiten agenda and keep control of the discussions.
  • Listen fully to the other side’s point – don’t start preparing your response while they are explaining theirs.
  • Take your time when making decisions.
  • Recap all points in note form and send to all parties before your attorney drafts the agreement.

Always pay attention to the seller’s actions. Are they argumentative on each and every point? Are they defensive about questions, comments or concerns that you express about their business? If they disagree with something you say, do they lean forward, lean back, roll their eyes, or do something else? Are they quick to attack without any basis of fact? Do they argue each point just because they feel the need to? Are they impatient? Are they really motivated to sell? When you sense their attention span waning, do they give in easier or become more combative?

Every Point Can Be Resolved

Never hesitate to bring all of the parties together for a face-to-face meeting.

It is amazing how brave most people are via email, but their position can soften considerably in person.

Some negotiations or certain points can become quite stressful. Often, the best strategy is no strategy at all. Meaning, if you encounter a deal point where the seller has drawn the line, don’t be too quick to push. Sometimes, you have to take a break for a time from the discussions, or move on to another issue and come back.

To read more about the negotiationg stage of the business buying process, here’s a terrific article on Negotiating Your Way To A Great Deal.


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