Many things make a good Business Broker. Business Experience, Network, Personality, Charisma, Marketing Skills, and more. However, none more critical than their ability to negotiate a favourable deal for both the vendor and the acquirer because at the end of the day, that’s the end goal.
There are three basic styles of negotiation, and each has an advantage. Ultimately the best negotiator incorporates the best of all three:
Aside from the negotiation styles, there are ten overarching rules for negotiating, but the finesse in which they are delivered is a skill not all possess and is often honed through years of experience.
This is where a Business Broker is worth their weight in gold or salt.
A great Broker will initiate a negotiation because whoever controls the start of the talks tends to control where they end.
Never negotiate with anyone other than the decision-maker. If there are multiple decision-makers, they all need to be a part of the process, whether face-to-face, via group Zoom calls or group phone calls.
Chinese Whispers to other parties tend to water down the negotiation and will often return an unfavourable outcome and lead to an additional need to negotiate, often ending up further away from your preferred goal.
You can ask your contact directly;
If you are negotiating on price, then Cash is King. If the vendor is considering an offer subject to finance and may fall over in the last hour or an all-cash, quick settlement offer, they are often more inclined to accept the guaranteed deal.
Therefore, when going into a negotiation, it’s best to ascertain the acquirer’s financial position.
Whether they need to secure finance or if they are a cash buyer.
If an acquirer is too emotionally invested in purchasing a Business, then it is likely that a good Business Broker will clock this a mile away and know that they can play hardball with them.
Similarly, if a vendor is still highly emotionally invested in the Business, they may be difficult and unreasonable when negotiating. They may even decide to withdraw the Business from sale, getting ‘cold feet’.
Knowing when to speak and knowing when to remain silent is a sixth sense that can make or break a deal. A Broker should listen to understand the issues a vendor or acquirer are having and not simply listen to respond. Listening intently and understanding the issues goes a long way to bridge the gap between the two parties.
Listening intently and understanding the issues goes a long way to bridge the gap between the two parties.
This is a compelling phrase when negotiating and utilising it at the perfect moment can elevate the negotiations to a point where there is a positive result.
Letting a party know that their current offer needs significant improvement can kick them up a gear in their offer.
An ill-gotten gain by telling either party what they want to hear, rather than what is accurate, will inevitably be a Business Brokers downfall. Because once trust has been broken, it is unable to be glued back together to either party, and people don’t deal with people that they don’t “know, like and trust”.
So, no matter what – TELL THE TRUTH!
Often if you offer up a trade-off, you engage in conceding, yielding, or exchanging things of value.
Exchanging lower value items to you and higher value to your negotiation partner is called ‘log-rolling.’
“If I were to give you an extended handover period, would that satisfy your concern and allow you to move forward with an offer my Vendor will accept?”
During a negotiation, there is a roller coaster of emotions. Excited, Frustrated, Disappointed, Elated, Fearful, Angry, Content, Overjoyed and everything in between for the vendor, acquirer and the Business Broker.
A Broker needs to keep their ‘Poker Face’ to ensure the best outcome. This involves remaining cool, calm and collected, whilst also moving the negotiations in a favourable direction assertively.
If you have a verbal agreement, be sure to send an email with the points that were agreed upon laid out and request a confirmation that it is correct. This helps anchor the agreement and will assist in preparing the final contract once all terms have been agreed to.
If you want to improve your negotiation skills, I have a list of books that you should read.
A Pro-Tip is downloading them in Audio format and listen to them whilst driving, working out, cleaning or other menial activities so you can better utilise your additional time to more ‘IPA –Income Producing Activities’. I use www.audible.com.au
Techniques: Learn how to Influence and Speed Read People, Enhance Negotiation and Conversational Skills by Jacob Clarke