Getting to a Win – Win Deal When Buying a Business

The art of negotiation is an important part of the process of buying a business.  Some of the details such as the conditions, the warranties and liabilities can be hot spots where the interests and motivations of the buyer and seller are in sharp conflict.  It’s important in this case to maintain a balance of interests between both parties. The following tips will help you to negotiate a win – win deal for that business purchase.

  1. Request that the seller not negotiate with other buyers while the offer is being negotiated. Sellers have what could be considered a an unfair advantage when they are in a position to to negotiate with  more  than one buyer at a time.
  2. Before you start the negotiation process, decide on the highest amount that you are willing to pay for the business.
  3. Practice your presentation. Assemble all of the documents you may require and establish a sequence for your presentation. Leave the difficult issues to last.
  4. Prepare in writing a list of facts that validate your position on an issue.
  5. Think through possible weaknesses in your reasoning to help you anticipate and respond to the objections that the seller may raise.
  6. Try to stick to your sequence during the meeting. Skilled negotiators may deliberately jump from one item to another in an attempt to confuse you.
  7. Take notes during the meeting to reduce the chance of misunderstanding.
  8. Avoid confrontational language that may terminate discussions. Remain calm at all times.
  9. Be prepared to practice a little give and take. If you are firm on an issue, then look for other areas where you can be flexible. Be prepared with alternatives, for example, terms, collateral and intangibles.
  10. Never tell the other party what you will not do, such as saying “I wont pay a cent more than $350,000”. Keep all your options open as long as possible. For example, you may wish to increase the sale price if you are unable to obtain outside financing and the seller is willing to provide you with financing on reasonable terms.
  11. Always be prepared to walk away if you cannot negotiate a deal that you can live with.
  12. If you plan to use an intermediary to handle the negotiations on your behalf and you both plan to be in attendance during negotiations, your respective roles must be clearly defined in advance.