Negotiating is one of the most difficult aspects of any business sale. If not done correctly, the buyer can end up either paying too much for the business, or the seller can receive less than they hoped for. Sales negotiations are delicate and challenging, but with expert help a win-win solution can usually be found. CGK Business Sales in Dallas (and in our sales offices nationwide) have years of experience in negotiating. We can work with you to make sure you’re completely prepared for the negotiation process.
Three Types of Deals
In business sales, we usually find three ways to negotiate:
- First Offer, Final Offer. The offer is the first, best, and only offer. Take it or leave it.
- Split the Difference. The buyer and the seller split the difference between offers.
- Let’s Trade. Using non-monetary desires to make up the difference between offers. This might be attractive financing, or keeping key employees or intellectual property, or keeping a share in the business after the sale.
Usually we will get a feel for how the negotiations will go early on in our communications between buyer and seller. Often the seller waits for the buyer to make the first move before more detailed discussions on price.
Value is the Key
The seller usually has the upper hand in detailed knowledge about the business and their industry. To make the buyer feel confident, it’s important that all knowledge is shared by the seller transparently in the due diligence phase. If both sides feel they have enough information to come to a valuation of the business, it’s more likely that those valuations will be similar.
When entering into negotiations, you must know any concerns you have and their importance to you. That way as you sit down and explore trade-offs and alternatives, you’ll know what you’re willing to consider and what you’re not. Price isn’t the first thing to discuss, and in fact you’ll want to cover pretty much everything else before you discuss price.
Of course, not every deal will work. Not every negotiation has a happy ending where everyone comes together. Sometimes you’ll walk away and move on to the next deal. That’s ok, in fact it’s healthy. There will be other offers and opportunities.
CGK Business Sales has negotiated many business sales in almost every industry in the Dallas market and in markets around the country. We’re sales negotiations experts, and we’re here to help you get the best deal. Contact us today to begin a confidential conversation about what selling your business might look like.