Negotiating and Closing The Deal

 

Negotiation and closing are critical business skills, and central to the M&A process - yet, many owners and managers have been trained "on the job", or left entirely to their own devices when it comes to this important step.

 

Great negotiators are groomed, not born. If you want to garner the highest price and the most advantageous structure for your next transaction, your powers of communication, persuasion and reason need to be compelling. This 4 page white paper will provide you with the road map and tools you need to negotiate and close your deal with confidence and skill. It is designed to provide a strong foundation and innovative strategies for communicating persuasively, overcoming objections and obtaining an agreement on the terms that best fit your objectives.

 

The process by which you are selling your firm has taken some very interesting twists and turns. From valuing and pricing your business to deciding on the proper technique in which to structure the transaction, you and your team have worked in conjunction with the potential buyer(s) to cooperatively examine each alternative and devise the proper technique in which to handle each phase in the process. As this process continues, you find yourself in an unfamiliar and sometimes a rather uncomfortable position:

 

The Negotiation Table

The art of negotiation plays a pivotal role in buying or selling a business. Differences of opinion are almost assuredly going to occur and only the most pragmatic negotiators can find creative solutions for these differences. By developing a working strategy, both you and the prospective buyer can maintain an open line of communication that will enable you both to know each other's position. It is imperative that the parties are aware of the issues that are important to one another. This allows each party to assume a non-adversarial stance in assurance that the business will change hands smoothly.

 

Many factors have to be discussed and finalized before a closing can be accomplished. These include the needs, terms and price of the transaction, as outlined by both parties. Sellers naturally have the upper hand when negotiating these particulars since they best know the business. The buyer can minimize this by learning as much about the business as possible, prior to the start of negotiations. This eliminates much of the difficulty of reaching agreement and keeps the parties from wasting time.

 

By understanding each step in the negotiation process and being fully aware of all the implications entailed in this process, each of the parties involved can enjoy a smooth transition of ownership.

 

Needs
At the outset, it's important for you to sit down and do some serious thinking about what exactly you want from the sale of your business. In order to determine your personal needs, ask yourself a few questions. Is it important that you or a family member remain with the business? Are you looking for a buyer who will continue your business traditions? Do you want certain tax advantages in exchange for a lower purchase price? Is there some minimum price that you must get in order to be happy?

 

It is extremely important for you to be realistic and honest with yourself. Outline the exact needs that have to be met in this transaction. Although, as with most things in life, you will have to make some compromises. Rarely does a sale completely meet all of the seller's needs and objectives — or all of the buyer's.

 

For example, If you insist on getting all the money at closing, you will almost surely have to compromise on price. On the other hand, if you're willing to finance part of the deal, you may get a higher offer. The point is, the more flexible you can be on your needs and terms, the closer you'll get to realizing the top-dollar value of the business.