Top 10 Negotiation Techniques to Use When Selling Your Business

Negotiation Techniques to Use When Selling Your BusinessNegotiation Techniques to Use When Selling Your Business

Imagine having to explain to an alien the concept of money. There was a time when this meant that bits of paper and little metal discs equated to a value of so many items of food, clothes, vehicles and so forth. Now with credit cards, electronic transfers etc figures on a screen equate to value.

The point is that someone somewhere along the line decided these things had value and had to explain that. Likewise when selling your business it is up to you to find a way to show why your personal pride and joy that you spent years working on is worth someone taking off their hands. With these Top 10 Negotiation Techniques you can get the maximum amount when you want to move on to pastures new.

1. It’s Not All About The Money, Money, Money

It may seem counter intuitive but dropping prices is not always the best way to get people on side in a negotiation. Indeed sometimes pitching a lower price can devalue what you have.

Here’s a real life example:

A film maker goes to a potential backer with an idea for a film. He says that he can make this film for around £50,000. In his mind because this idea is brilliant and relatively low cost surely a business savvy investor will cough up, right?

Except in this case they didn’t. Film investments are notoriously risky and the people putting the money in want something that they think will make money.

So the film maker went to another meeting. This time the project was pitched at £2 million. And sure enough at this meeting his idea was taken a lot more seriously.

The point of this story is to look at the value of what you are offering to a potential buyer. Explain to them why you have set the price and only drop the price if you need to!

2. Aim high

“You should always aim high. What if you have low aspirations and goals in life and you don’t meet them?” Ricky Gervais

It is important that you do not misunderstand this one. Yes you want the best possible price. This is not the same as giving them a wildly unrealistic value just the highest possible calculations to give you the best deal.

You want to be able to start off high so you can move further down if you need to!

3. Do your research

When negotiating it helps to be prepared for the questions they are likely to throw at you. However this is not just about finding out what they will ask about you it is also about finding which of their buttons are the right ones to push!

For example, say you go on their website and it says they are looking to “expand into the Asian market.” If your business is particularly popular in that area you could say “Well if you buy our business this will benefit you more in this market because…” Take note of anything that could give you the upper hand!

4. Don’t split the difference!

It is the easiest option and the simplest of negotiation techniques- they have their figure, you have yours, meet in the middle. The problem is that meeting in the middle is not really what you are going for. Hold out for a little bit more!

5. KISS (Keep It Short And Simple!)

Deals can often get complicated and it is this that often causes those annoying frustrations and delays that end up hijacking negotiations and slam you straight back to square one!

Whoever you are dealing with try to spell out what you want and do your best to talk about minor niggles and worries as soon as possible so you can focus on the “This is the business, this is how much I want for it” part!

6. “Don’t give me problems, tell me solutions”

It is easy to define a negotiation as “us and them” If someone has concerns be proactive and find someone who can deal with an issue. For example if they give you a technical question you don’t know the answer to, find the tech guy and get them to answer it as soon as possible.

It may be a cliché but when it comes to selling a business time really is money, especially wasted time!

7. Give and take

While you want to get the best deal you also need to have a few tricks up your sleeve in order to make sure it goes through. If you are too tough with your negotiations people may end up walking away and then you have to start all over again!

For example, someone may want to buy your business but do not want to purchase your stock that is more than a couple of years old. You could say “Alright that’s fine then but in which case we’ll have a clearout sale and make money from that to fund our next venture.”

As ever in life it’s a question of balance- get the best price you can but don’t be afraid to throw in the odd freebie too!

8. Make the first offer

Common wisdom suggests that you ought to wait for your buyer to give you a figure and make the first move. However sometimes it is better to take the initiative and tell them what you want first. If they go for it then you could potentially save yourself a lot of time!

9. Know when to walk away

If you have done your sums right then you will know the most you would like to sell your business for and the lowest amount you are prepared to sell it for. Do not be afraid of walking away if a deal isn’t right. Trust your instincts! (Check out the ‘Calculate Your Walkaway Price’ Pack at our Store)

10. No table thumping!

There is a difference between being assertive and aggressive. Do not say that any terms are “non-negotiable” or insist on a deadline. Most deals go through when both parties are prepared to work together and come up with the right agreement. Subtle persuasion works better than tea cup hurling!

In short these negotiation techniques will help you to maintain the right atmosphere when discussing deals but more importantly will give you a better chance of selling at the right price. Good luck!

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”