The negotiations process has three main components and they consist of; planning, engaging the other party and closing the negotiations. Most negotiations are pretty straightforward; there are many decisions that will need to be made. It is very important that you understand that sometimes the negotiations will be very challenging. If you plan it all out, you are more likely to come out on the winning end of the deal. Plan your approach, your tone and your style of communication to prepare before sitting down to negotiation to purchase a business.
Negotiating to buy a business is one of the most important negotiations you’ll ever do, so the better prepared you are, the better the outcome you will get. Make sure your objectives are clear in your own head to include your minimum outcome, the outcome you anticipate, and what your ideal outcome will be before you meet. Give thought to what you’ll do if your plan fails. Try to understand both sides of the issues involved. Put your own desires in in a list and rank them by their importance to you.
Decide beforehand what concessions you are willing to make. Take the time to analyze the other party’s objectives. Research the market and ask colleagues their opinions. Rehearse your negotiation tactics well before the scheduled event. Create an agenda that includes topics to discuss, who the participants will be, the location of the meeting and then get it scheduled.
When you consider your negotiating style, consider a calm tone and confident body language. If you are too aggressive you may intimidate the business owner or if you are too relaxed you may come across as uninterested. Strike a balance with your tone and confidence before you sit down to discuss the purchase. Stick to the agenda you made previously to keep the meeting timely. Make your first proposal and expect a counter offer. In general you will not accept their first offer. Make sure you fully understand their first offer but remember your own objectives.
Take the time to discuss different ideas and perspectives and consider their needs. From there it is based on making concessions and listening to their concessions until you strike a happy medium. Remember it is a give and take, usually on both sides of the issue. Before you close in to seal the deal, take a moment to reconsider your own objectives and make sure the business seller is slowing down on counter offers, his arguments will begin to fade as time passes.
Pay attention and you will begin to see the businesses negotiator getting tired and the negotiations have begun to merge in an effort to create an equal playing field. Once you are at that point; which may or may not be settled in the first scheduled meeting, go back over and articulate the agreement as it currently stands to be sure you both understand the settlement and everything that it includes or involves.
Now is the time to clear up any discrepancies between the two of you. By revisiting the details now you will both have a sound understanding of all agreements and concessions already made. It is certainly better to iron out any misunderstandings now than to regret it later! If you are both comfortable with the deal you can begin to make closing statements such as “This may work out well for me.” Now get that agreement in writing by your agent or attorney.
Once everything is clearly written on paper have your attorney read over the documents and make sure there are no hidden clauses that may bring about a surprise later. Once the “go-ahead” is given by your attorney, be sure to follow up on any commitments you have made on your end. Dragging your feet now may make your seller get cold feet and lose trust in you