10 Tips for Negotiating Your Business Sale Like a Pro
Most business owners have plenty of negotiation experience, and intend to leverage that for a better deal as they move through the exit planning and business sale process. But most business owners have never sold a company.
Most business owners have plenty of negotiation experience, and intend to leverage that for a better deal as they move through the exit planning and business sale process. But most business owners have never sold a company. Negotiating the sale of something you’ve invested so much of yourself in is categorically different. Going in blind—or believing you have stronger negotiation skills than you do—can cost you dearly. Instead, follow these 10 strategies to ensure you get negotiating right.
1. Be prepared, and set negotiation terms early. If you structure the negotiation—the location, the terms, the length of time—you already have the upper hand. Spend some time thinking about where you should negotiate, and when. Then research your potential buyer so you know exactly what you're getting into. Knowledge is power.
2. Establish rapport and build trust. No one likes a negotiation partner who bullies or condescends to them. In the real world, successful negotiation depends on being a likable, empathetic person. Make the other side like you, and they’ll want to give you more. Be honest, and they’ll believe what you tell them. Don’t get caught in a lie or half-truth, and be upfront about your business’s shortcomings.
3. Visualize success. What does a successful negotiation look like? Many owners go into the process with little idea. That makes it hard to know when you’re doing things right, or even when the process is over. Make a list of the specific goals of each session, then visualize different strategies for realizing those goals.
4. Listen more than you talk. We all love to hear ourselves talk. That’s a weakness, not a strength. People learn more when they listen more, and successful negotiations require you to learn as much as possible about your deal partner.
5. Don’t give it all away too early in the process. Giving all the information away upfront puts you at a disadvantage. Instead, reveal information only on an as-needed basis. The process should be slow and steady, which builds interest and moves the process to a final crescendo.
6. Answer questions honestly and concisely. Don’t talk like a politician. Don’t put a spin on everything. You don’t know what spin will appeal best to this buyer, so it’s better to be honest and concise.
7. Check understanding. Summarize what the buyer tells you and what you tell them, then verify that you’ve gotten everything right. This ensures you both have the same understanding, and avoids miscommunications that can erode trust.
8. Be confident and assertive. Buyers respect sellers who are confident about their business. This confidence conveys that you’re proud of what you’ve built. Just be mindful that confidence is neither boastful nor bullying, and that if you engage in either, you actually look less confident.
9. Come prepared with the right information. This requires you to know your buyer. What is most important to them? What are they most likely to ask you about? Don’t focus on what matters to you; give them the information that matters most to them.
10. Have a clear bottom line. Many sellers make the mistake of walking away when they merely dislike the direction of negotiations, or feel somehow disrespected. This behavior puts you in a position of weakness. Instead, you must have a clear and specific bottom line in mind, and know exactly when you intend to walk away. Don’t let your emotions get the better of you in the heat of the moment.