29 Nov 10 key steps to negotiating a successful business transaction
By Ian Jones | This article first appeared on Hunter Headline
Buying or selling a business can be a straightforward process – but only if you know what you are doing! These types of transactions can be quite complex, but they don’t have to be hard.
In a business sale transaction all parties want to be able to walk away and feel like it was a fair outcome, in essence a win-win outcome.
With that in mind I have prepared the 10 key steps to negotiating a successful business transaction:
- Always start with the end in mind.
You need to know at the start how you want the negotiation to play out, so you need be clear about your objectives. This will keep you and your negotiation focused.
- The 3 Ps – Preparation, Planning and Purpose
No matter which side of the transaction you are on you want to ensure you are adequately prepared with everything you need to participate in the negotiation. You can then plan for the different stages of the negotiation, with your purpose in mind.
- Seek first to understand!
Make it a priority understanding the other parties’ priorities and motivation. Knowledge is powerful and you can use it to work with the other party to achieve a better outcome.
- Do your research
Information can put you in the driver’s seat, you can use it to substantiate or justify your position, the price you’re willing to sell or pay or even the approach you take.
- Know your limits
Know up front what you can afford to pay or sell at and what you’re prepared to negotiate on. Also consider telling the other party or trusted third party your constraints, concerns and your intentions.
- Have a heart and watch your words
Sometimes careless, subjective and emotional comments or comparisons about a business, its staff or performance can put the other party off-side and this can jeopardise the deal.
- Take your time, but don’t waste it.
Procrastination or unnecessary delays can result in frustrations creeping in and the deal falling over.
- Actions speak louder the words.
If you want to move forward say so… and don’t be afraid to propose how you want to move forward. Often a gesture of substance or a commitment can be enough for the other party to agree to your proposal.
- Trust, Integrity and Respect
People like to do business with people they trust and respect. Some people believe that to negotiate hard, you must be ruthless, tough or hard however people who show empathy, have understanding, are honest and negotiate with integrity often win the support and the trust of the other party and achieve better outcomes.
- Acknowledge, Thank and Celebrate
It might seem like a less important step but if you genuinely acknowledge, thank and celebrate your success with those who helped achieve it, you will be well positioned for even more successes in the future.
As a bonus piece of information – also make sure you surround yourself with the right team! This includes your accountant, financial planner, lawyer, and of course your business broker.
By having the right people involved in the business sale you are much more likely to have a positive outcome.
If you would like some help to sell your business or are interested in purchasing a business, please feel free to get in touch with us.