How to Negotiate the Deal

Over the last few weeks, we've walked you through the process of determining the type of business you want to buy, where to find them, and how to assess their value. Equipped with this information in hand, you're now ready to go into the fun part: Negotiation.

Ok, depending on your personality, this might not actually be the fun part. Still, it's definitely not the part you can avoid, especially if you want to reach an advantageous deal. (Which, of course, you do.) 

One thing to remember before we dive in is that negotiation is not an exact science. There isn't a checklist you can follow that will guarantee a positive outcome every single time; there are far too many variables at play. So with that in mind, dismiss the notion that there's only "one right way" to do this. There isn't. 

A quick Google search will give you more advice than you want to know about successfully negotiating a deal: Don't speak first. Words you should never say. Know when to talk away. Do your homework and come prepared. The list goes on.

But because we believe in keeping things simple, we narrowed it down to four key areas we find are essential to help you negotiate the deal of your dreams. 

1. Understand the Seller

Negotiating a successful deal is about more than throwing out impressive offers. Money is important, yes - but there are likely other "unrealized" reasons a seller wants to sell. It's your job to figure out what those reasons are, and you can use them as part of the negotiation. 

• Why are they selling? Financial reasons? Retirement? Health issues? New opportunities? Are they simply burnt out? 
• What will their life look like post-sale? Less stress? More time for family? Freedom to pursue other interests?
• What do they want from the buyer? Keep their employees employed? Stay on in a part-time capacity? Leave their name on the building? 

As an aside, please do not enter your meeting with a clipboard and a list of these questions to run down like you're conducting an interrogation. Work them in naturally. Keep things conversational. They'll feel more comfortable opening up, and you can discover the actual reasons behind their desire to sell.

2. Highlight the Give, Remember the Get

The most successful deals are ones where both parties walk away satisfied. As you get to understand the seller and what they genuinely want and need, you have an opportunity to fulfill that for them. Remind them of what they gain by selling you their business. For example: 

If they mentioned they wished they had weekends free to watch their grandkids play baseball, remind them this deal gives them back their time. 

If they are burnt out, remind them they have the opportunity to walk away and improve their mental health. 

If they want to ensure their legacy continues and their customers are taken care of, show them how you are ready to make sure both of those things happen. 

These are elements of the deal you can't put a price tag on. And as the buyer, you can use this information to help knock down the final sale price to an amount that makes it a wise investment for you - while also giving the seller what they really want. Win-win.

3. Focus on Price OR Terms

Sometimes the best advice is the simplest:

Negotiate for the price you want and be willing to sacrifice some of the terms.

OR

Negotiate the terms you want and be willing to pay more to close the deal.

4. Don't Fall in Love at First Sight

It might be fine for a Disney movie, but "love at first sight" has no place in negotiations. It's important to stay pragmatic - you're not doing yourself any favors making a doe-eyed deal. We can really only tell if something is "good" or "bad" by comparison, so before you sign the dotted line with hearts over the i's, make sure you compare it to similar deals. Don't let your desire for the business get in the way of making sound, logical decisions. 

Last Thoughts

Again, there is no right way or wrong way to negotiate. Remember this, if nothing else. Do your research, make your notes, and have a genuine desire for both parties to walk away satisfied, and you'll be well on your way to successfully negotiating and closing your first deal.