Buying a Business the Way to Negotiate Posted by Terry Foley For an entrepreneur, decision to buy a new business is the most exciting and nerve wracking at the same time. From the time to searching for the right business type till the time of making the final payment, each step needs hundred percent attentions. An entrepreneur might get stuck at various stages from researching the market or industry to deciding on type of financing. One of such stage during the process of buying a business is ‘negotiating on price’. Negotiating, especially while buying a business and closing a deal, is an art. An entrepreneur cannot succeed in negotiating without a strategy in place. Also, at this stage the entrepreneur needs to have an open and calm mind. He cannot have the leave-it-ortake-it approach at this stage. This is a very sensitive stage of the entire process of buying a business. Many deals stuck at this stage never conclude or convert. This happens because parties fail to see the other perspective or they ignore the concerns or limitations of the other party to protect their own. The best way to handle this stage successfully is to think professionally still being emotional. Let’s learn a few traits of a good negotiator:
Do your homework first Negotiations would differ depending on the type of contract one is entering into. For example, clauses to negotiate would differ in case of purchasing name of an existing business from purchasing business’s assets. The entrepreneur must initially gather his thoughts basis the type of purchase he is entering into. Study the industry trend, examples from past and also try to understand the reason of sale of the concerned business. Also, each clause in the sale agreement must be read & thought through as negotiation is not only done in price but also in every single clause of the sale/ purchase agreement. Only when all relevant information is gathered, can an entrepreneur pitch with confidence. An entrepreneur with all this homework done is more likely to come out as a winner in the game of negotiations. … Read more!