Negotiating The Sale Of Your Business

For most business owners the sale of their business is the largest financial transaction of their life. Most will rely on the proceeds of their sale to fund the next stage of their life, whether it be retirement or a new business venture. So, there’s often a lot at stake and emotions can run high through negotiations.

Besides the agreed upon dollar value of their business, sellers needs to be prepared to negotiate how and when the money is received, what amount of the sale proceeds will be taxable, how much, if any, money will be left in the business as operating capital, how long the seller will remain connected to the business post sale, how to allocate prepaid revenue and expenses, and more. It is a lot to think about and make decisions around as you negotiate with buyers.

These 4 tips for preparing in advance will help sellers negotiate the sale of their business with confidence.

1. Build your Deal Team: Having a strong deal team of professionals to help you through the negotiations is essential. A business broker, accountant, attorney and financial advisor will ensure you are thinking through the implications of decisions before you respond to a buyer’s offer and hash out the final deal terms.

2. Adopt a Win-Win Mindset: A win-win mindset recognizes that Sellers and Buyers need to feel good about the deal being made and no one should feel like they are losing. It’s through negotiation that you’ll find a mutually agreeable outcome that gives you both as much of what you want as possible. If you both walk away from the closing table happy with what you've gained from the deal, then that's a win-win.

3. Avoid digging in and drawing hard lines: It’s good to know your bottom line needs when selling your business but be open to different ways of getting the sale done. If you are too adamant on what you will or won’t consider, you might be denying yourself the opportunity to achieve your goals. Work hard to keep an open mind as you consider the deal terms a buyer is proposing. Keeping an open mind and being flexible in your thinking will enable you to see the opportunities in an offer.

4. Keep in mind your buyer isn’t an adversary: Think of your buyer as your co-conspirator in negotiating the best deal. Buyers that make you an offer want to buy your business; you simply must agree on what you’re willing to take in exchange for it. Together, through thoughtful negotiations you can arrive at a deal, or respectfully agree there isn’t enough common ground to strike a deal. Being adversarial with your buyer is a quick way to a bad experience for everyone involved.

Lean on your deal team professionals to help you move beyond your assumptions and explore deal terms that at first glance you may not agree with. To learn more about how you can be prepared to win at the closing table – review our library of Seller Insights Articles and explore our Seller Insights online learning for business owners.