Let's be honest . . . As the owner, you're probably the least qualified person to negotiate the sale of your business.
It's not that you don't have the knowledge or ability to conduct negotiations – you know your company better than anyone. The problem is that your personal and emotional investment in the business can get in the way and negatively impact your ability to seal the deal.
Nonetheless, when it's time to negotiate, you will be the person who is responsible for closing the deal with the buyer. Although it may be the most challenging sale you've ever made, it's critical to keep your wits about you and apply many of the same selling strategies that made your company a success in the first place.
If you approach negotiations the same way you approach any other selling relationship, you'll do fine. As a reminder, we've compiled a list of business sale closing tips to help you stay focused and on target.
- Lay the groundwork. Your selling strategy begins with educating yourself about your company and developing key selling points. Enter negotiations with a solid plan based on the reasons why your company is an attractive business opportunity for buyers.
- Separate buyers from tire kickers. Be prepared to encounter more than a few "tirekickers", i.e. prospective buyers who lack the capacity and/or desire to see the purchase through to its completion. Don't waste time with unqualified prospects and definitely don't give them access to your financials or other protected information.
- Define your goals. Clearly define your goals and desired outcomes before you start negotiating with buyers. In fact, it's helpful to be upfront with buyers about what you expect from the sale and use it as a baseline for your discussions.
- Let buyers suggest price. Negotiation experts recommend forcing the buyer to make the first offer, even though it will be too low. Then after explaining your reasons why it isn't acceptable, ask the buyer to come back with a second offer. The idea is to get the buyer in the habit of being flexible on price.
- Negotiate terms. In addition to negotiating the sale price, you will also need to negotiate the terms of the deal. Issues like financing, included assets, owner transition, and other details are all on the table.
- Consult a broker. Don't attempt to negotiate the deal on your own. Business brokers and trusted advisors offer much-needed objectivity and wisdom throughout every stage of the process.