Negotiate like a Shark: How to get the most out of Investments, Mergers, and Business Sales

Whether you are buying or selling, merging your company with another one, or just going after the big sale, negotiation is the key to everything that you give or get from doing any of these activities. Negotiation dictates what you receive in a sales price, or what must be included in the deal. It also may dictate the amount of time you have to spend in the business once you close on the sale of the business. All these items are subject to negotiation. So, how well do you negotiate?

One factor to consider is how much in demand you or your business is. For instance, it is considered a “seller’s” market when it comes to selling a home when there is not a lot of inventory on the market for buyers to choose from. As a result, buyers, without a lot of negotiation, are giving sellers full price offers or even above asking price.

This can also be true for your business. If your business has the only patent for a unique product that businesses need that part to manufacture their product, your company may well be in demand. At least for the short term, buyers may give a higher price for the products that you manufacture, or for the purchase of your company.

Another factor to consider is how much knowledge that you, as the seller, have about your buyer. What is the important to that buyer? What is the reason that buyer wants to buy? What is that buyer really hoping to get out of the purchase? Does this purchase add to the buyer’s book of business? Does the purchase get the buyer access to another product line? Does the buyer need your products to be able to sell the buyer’s product line? Does the buyer need or want any of your key team members? How important is culture to the buyer? Has the buyer ever defaulted on agreements in the past? Has the buyer ever purchased another business—if so, with what result?

You will want to look at your motivations, as seller, as well. Of course, in part it is about the money. It is also when you get the money—full cash price at closing is much better than seller financing. It may be about not wanting to stay with the new buyer’s company for any length of time. It may be that you have an emotional attachment to the business and have a hard time giving it up. You may have employees in the business that you want to make sure that have a job after the sale. You may want to have the right culture to the buyer’s business so that you feel there is a good fit. Most sellers want to sell to a reputable buyer, as the seller wants to keep a great reputation in the marketplace, even after the seller exits the business.

Once you have done that fact-finding, you will be a much better negotiator already. There is an adage that “knowledge is power” and that applies to your ability to negotiate like a shark by having the confidence needed!

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Denice Gierach

Gierach Law Firm

Denice Gierach is an attorney, CPA, Northwestern University business master's graduate, and has owned several businesses from real estate to manufacturing. She is the lead attorney at Gierach Law Firm in the Chicago area. With more than 30 years of experience, she has been a respected and sought-after resource for businesses looking to grow, sell, solve problems, and succeed long term. Her insights across business areas gives a fuller lens to business issues and solutions, and helps businesses grow and succeed with less time spent on legal issues and other time-consuming problems.

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