Negotiating the Sale of Your Buisness

Negotiating the Sale of Your Buisness

Posted on October 20, 2017

Negotiating the Sale of Your Business

1.  Never negotiate with yourself.  A savvy buyer will ask you what you will take for your business.  Never answer, hint or even allude to a number.  Doing so would instantly set a ceiling on the value of your company.  Let the buyer make the first offer.
 
2.  Don't be someone else's "prop deal". 
Professional buyers like to avoid bidding for companies against other buyers by trying to get a "proprietary deal."  When you're ready to sell, run a professional sale process in which more than one buyer is invited to make an offer.
 
3.  Find a buffer.  Quarterback, homeowners, and recording artists all hire agents because it's virtually impossible to negotiate objectively when selling a piece of who you are.  An intermediary (a merger and acquisitions professional for companies valued at more than $5 million or, a business broker for smaller companies) will run a professional sale process and create competitive tension for your business. 
 
4.  Don't fall in love with an offer.  When you get an offer, the  offer letter will look official.  Don't be fooled. There is nothing sure about it.  About half of the deals that get to this stage ever close.
 
5.  Never let them inside the tent.  Some buyers will claim they need to interview all of your employees during due diligence.  They may be genuinely interested in getting to know your team, but do it!  Once you tell your employees that you are selling you lose some leverage.  If you have a key employee, it is legitimate to have the buyer meet them.  However, there is no justification for allowing them to meet the majority of your employees.
 
6.  The 90-day execution.  The biggest rationale buyers use to drop their offer after due diligence is that you missed your numbers for the most recent quarter.  Hit your numbers during due diligence and remove the excuse to negotiate.  Offer bonuses and work
harder during due diligence.