Negotiating a Sale

Before reaching the negotiation stage of selling any business, a lot of hard work should have been carried out on both sides.  The vendor must ensure his company is totally ready for the sale and any potential purchaser should have carried out Due Diligence.

Negotiations can be complex and time-consuming, and more often than not break down, sometimes at a very late stage; this can be very stressful for both parties.  Saying all this if the right approach is taken by both parties from the outset there is a better chance of a deal being struck that both parties are happy with.

The vendor and any potential purchaser should set their own goals from the very start so both are fully aware what they want to get out of the negotiation process.  Having a clear plan for both sides should prevent either side from taking the lead during the negotiation process.  Both parties should keep to their objectives: a good negotiator will always win the more important issues and let the other party win the minor ones.

Prior research and Due Diligence is always invaluable during any negotiation process.  It will show the vendor that you have a true picture of their company; this can be used to strengthen your bargaining position.  A good purchaser will attempt to discover any weaknesses in a company so this can be exploited; on the other side, a good vendor will attempt to highlight the company's strengths.

The use of basic psychology in the negotiation process is often used: a common tactic is for the purchaser to try to understand the aspirations of the vendor.  Most people become emotionally attached to their business and could have personal friends within the staff.  Understanding this is a very important tool for a successful negotiator.  A good tactic used by the vendor would be to highlight how well his particular sector is growing year after year and how well the economy is doing and how well the purchaser will fair in the future.

Negotiation is a natural process in business; both sides should be fully prepared and if possible enjoy the process.  Through good negotiation, it is possible for both sides to come out of the deal happy.