Ten Rules for Successful Negotiations

Negotiating a business acquisition follows the basic strategies as negotiating any other transaction – only the stakes are somewhat greater.

How can a buyer or seller improve your negotiating techniques?

1. Investigate the sellers (or buyers) position. How motivated are they?  What are the problems or pressure points?  Remember – you bargain from your opponents position, never your own.   Do your homework and investigate the seller or buyer as thoroughly as you do the business.
2. Listen – Don’t talk. When you listen you pick up valuable clues.  When you talk you tip your hand.  Encourage the seller (or buyer) to explain his situation.  Ask questions.  Draw your opponent out.  You’ll not only receive information useful in negotiating a better deal but help improve your relationship.
3. Divide and Conquer, Address Multiple Issues One At a Time. Where multiple issues exist or where multiple problems exist, separate them and discuss each individually.  Larger problems are more manageable when divided into component parts and each part considered individually.  But remember, you cannot commit yourself to any one pint unless you are in agreement on all other points as an acceptable deal requires a favorable balance of all points.
4. Address Easy Issues First – Put Problem Issues Off Until Last. Don’t get stalled on one particular issue or on one aspect of the deal which is difficult to resolve.  Set areas of disagreement aside and address other more easily resolved issues.  Hopefully when the buyer or seller return to the problem issues you will have already resolved most items and will have invested considerable time and effort to bring negotiations that far.  At that point an earlier obstacle will take on a different perspective and be more readily be resolved.
5. Work with the Seller (or Buyer) to Create A Joint Solution. Encourage the seller to participate in the proposed solution.  Draw the Seller (or Buyer) into the process.  Work with him to identify the problem.  Ask his advice.  Listen to his opinions and suggestions.  Literally work together with the other party so that both parties can feel an ownership in the solution.
6. Put Yourself in the Seller’s (or Buyers) Position. Consider the seller’s (or buyer’s) point of view.  Does it satisfy his needs, goals and objectives?  Where does it fall short?  What are the alternatives to satisfy those needs and create an acceptable deal?
7. Develop Multiple Solutions. Once you have identified the issues to be resolved, then determine how you can solve the problems at the least possible cost.  You should walk into negotiations with all the possible alternatives in mind.  But don’t rely on your solutions alone.  Ask the seller (or buyer) for his ideas on resolving the issue.  Neither party should limit your own solutions.  Brainstorm with advisors and associates until all the possible solutions are defined.
8. Deal With the Decision Maker. Don’t engage in two step negotiations where your opponent must clear every point with a partner, attorney, spouse, etc.   Find out in advance whether your opponent shares your authority to make a deal and if not insist that the decision makers are present at the negotiations.
9. Be Patient. Negotiating a business acquisition can take months and can’t be rushed without paying a steep price.  Conversely, the patience to extend negotiations can create a much more favorable deal.
10. Be prepared to take a walk. Don’t become emotionally committed to a prospective acquisition.  You defined your limits before you started negotiation and if an acceptable deal cannot be reached, be prepared to walk away.  Until you are handed the keys the business isn’t yours and may never become yours.  This advice applies to either party.  Just as there are other businesses there are other buyers.

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