The 6 Essentials Of Negotiating The Best Price For Your Business…

Anybody can put a business on the market but negotiating the best sale price is a different ball game. In a typical business sale, the skills of the seller in terms of negotiation, can cause dramatic negative swings in the final sale price. This is notwithstanding plenty of preparation on the seller’s side but the fact that they don’t know how to negotiate can undo all of the hard work that’s gone before – all in a single meeting!

With thousands and even millions riding on a successful sale here are some tips from the Financial Power team on how to increase your chances of success…

1. Never Forget The Principle Of Successful Negotiation – Strength

strengthThe key to successful negotiation, whether it’s selling a business or a car for that matter, is to understand how to operate from a position of strength. That’s why packaging your business wherever possible as a strategic sale and not just a pure investment is always a good play. In other words if the sale of your business helps a previous competitor or quickly adds customers to the bottom line of another synergistic business you’ve just created a position of strength for yourself.

2. Avoid Selling Because You’ve Got To

Even though some sellers don’t have a choice when to sell their business, in most cases they do. Unless the business is about to go under, most sellers do have control of when they put their business on the market. Preparing far in advance again allows you to come from a position of strength and maximise your opportunity when it comes to sitting down at the negotiation table.

This type of preparation would include reducing the cost base of the business and increase the sales and revenue in strategic high value areas.

3. Valuation Credibility

creditbilityFor a valuation to hold water in the mind of a buyer the business offer and sale price should add up in terms of it being rational and logical. Too often we see business owners who talk to a couple of business transfer agents and brokers and come up with a sale price based on some pretty flimsy assumptions.

For example, Financial Power’s exit strategy involves a very strong valuation and packaging phase that will stand up in the face of some of the most stringent due diligence.

This type of pricing and packaging is essential if you want a valuation that will give you the strength you’ll need during negotiations.

 4. Make Sure You’re Dealing With More Than One Buyer At A Time

buyersI think we’ve all seen how the sale price of anything goes up when you’ve got multiple people bidding at the same time. And selling a business is no different. That’s why it’s essential that you find a way to get your business into the marketplace so the all of the right buyers see it at the same time.

Sometimes it’s best to list the business online but in other cases it’s not. The context of your sale and how strategic it is will affect that decision. Again getting the right buyers to the table at the same time is something that Financial Power’s exit strategy includes.

5. What To Concede and When To Compromise

There is always going to come a time during negotiations where a buyer will ask you to make a concession. This may be a financial or price based concession or a time and effort concession. Either way it will cost you.

The worst time to decide to compromise on any point is in the middle of negotiations. This is the time when you’re most tempted to say ‘yes’ especially if you feel close to closing the deal. Instead you want to be very clear before starting negotiations what you will give way on and what you won’t. This avoids big mistakes during the final phases of putting the deal to bed.

6. Patience and The Courage To Lose

patienceBeing patient always pays dividends in life and when it comes to selling a business it can pay off big time. Patience sometimes is about ‘looking’ patient even though you want the deal to happen as soon as possible. The person that shows they want the deal to happen sooner than the other party is nearly always at a disadvantage.

The good news is, if you’ve set things up right, most aspiring buyers can rarely hide their enthusiasm to buy a good business and that’s what you’re aiming for. This is another reason why making your business a strategic purchase as well as a good investment is a core strategy we promote here at Financial Power.  Find out more here… FREE EXIT STRATEGY REVIEW