GlobalBX

Making the decision to sell your business is hard enough, but having a buyer tell the owner it is not worth as much as he thought can really be a blow. The emotional attachment that most owners have to their business is very deep. They remember the long hours, the financial hardships, the wearing of all the hats responsibility, the worry and the pride of success. They believe that they ran their business the right way and that the new owners should stick with their system. With this backdrop, the actual selling and negotiating process can be a bucket of ice water over the head awakening – not at all pleasant.

Buyers and Sellers are at cross-purposes when it comes to the terms and conditions of a sale. What is positive for the buyer is negative for the seller and vice versa. When was the last time you bought a car and simply paid list price? For the car dealership, this back and forth haggling is simply part of the process. For a business owner, this process can feel like a personal attack. The owner’s response to this perceived attack can often create a barrier to a successful transaction.

If you have ever followed the contract negotiation process between professional athletes and their team, you have a good example of how the process can often unfold with bad results. The team is trying to get the best deal, maintain fiscal responsibility, and manage to salary caps. The player is trying to get paid as much as he can and often uses the contract amount as his measure of worth in comparison to the other players in the league.

The team is trying to justify a lower salary and may bring up another player with superior stats and a lower salary as a negotiating point. They may point out one or two weaknesses in the player’s game. The player holds out and misses games, hurting his team. He may respond to the negotiating tactics with attacks on the team’s management in the newspapers. This process often creates irreparable damage and after a contentious year, the player is traded for far less than he was originally worth.

The emotions of a business seller are equally charged. If the buyer’s offer is a fair deal and the owner wants it to occur, he must be able to detach his emotions from the normal negotiating process. Every point is not a personal attack. The buyer must understand that his intent in buying the company is to gain post acquisition performance improvement. If during the process, he values the last nickel he can scrape out of the deal at the expense of the good will of the selling company, he has defeated his purpose.

The use of intermediaries that are familiar with and comfortable with this process can keep the deal on track and preserve the necessary good relationship between the buyer and the seller. For the advisor, this is just part of the process and a point given by one side is exchanged for a point taken by the other. The transaction is completed, the two companies come together in a spirit of cooperation and growth and a year later both buyer and seller are happy with the result. After all, trading the acquired company to another team is not really an option.