We often hear from people that they do not want to have to personally negotiate the sale of their own business. To that we say… “Not only does that help you avoid something that is unpleasant, it’s smart business.” We encourage our clients not to engage in direct negotiations. Below are some high-level tips for buyers and sellers on how to navigate the waters of negotiating the sale.
A Good Deal Is Not One-Sided
“Negotiation in the classic sense assumes parties are more anxious to agree than disagree” Dean Acheson
Negotiating should end up in an arrangement that adds value to both parties. Our goal in the negotiation is for both sides to feel like they got a great deal. We want the buyer to be hugely successful because they have picked the right practice for them, and we want the seller to be able to move to the next phase of their life with the resources that they need as well as the confidence they demand-that the practice is in good hands. It helps to find value in the sum of the parts that both people bring to the table. (It also helps to find the right people to bring together!) Flexibility is very important in these transactions and it is helpful to go into negotiation with both parties believing it will end with a positive outcome. If you believe it, it will happen.
Leave your Ego Out
“During a negotiation, it would be wise not to take anything personally. If you leave personalities out of it, you will be able to see opportunities more objectively.” Brian Koslow
When you are selling your business, you are selling years of hard work. You care about the clients you have come to like and respect as well as the employees who have been essential to your success. It is understandable that the process is going to be emotional. One of the benefits of using a broker is that we can help you look at offers more objectively. Outward displays of emotion can make parties act without ration. This can also be viewed as manipulative. We want to keep the negotiating as rationale and factual as possible. This being said, emotions can be important when they are communicated honestly. Emotional needs must be addressed but only when done with honesty and in the open. Taking adequate time during negotiations is key to sorting out your emotions and to put your needs into clear words. Words are like feathers of a pillow: once they get out, it’s very hard to get them back in.
Don’t Sweat the Small Stuff
“Present fears are less than horrible imaginings.” William Shakespeare
Negotiating is not just about the deal, it is about creating an agreement where both sides can flourish. The seller can retire, travel, enjoy family or explore a new career. The buyer can find professional fulfillment and grow a successful business. It is important to maintain context, there is no use in winning the battle just to lose the war. Keep your perspective about the whole transaction rather than focusing on what is happening in the moment. We have seen parties argue over a box of paper and the question should be “Is it important enough to risk the deal?”
About the Author: Stephanie Smith
An experienced intermediary specializing in accounting practice sales, mergers and acquisitions, Stephanie brings a strong financial background to her position at Poe Group Advisors with over 12 years of sales and marketing experience in the banking sector. This prior experience lending to and working with small business owners assists her as a skilled negotiator helping maximize value for both buyers and sellers.