Seven Top Tips On Negotiation Tactics
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07 October 2013 - lawdit
Buying and selling a business is not a common occurrences for most
people, and therefore there is not always an opportunity to practice
negation skills or tactics. Here are some simple tips for both buyers
and sellers on how to bargain confidently and effectively.
For the Buyer:
- Haggle on the first quoted
price - never
accept the first offer. It seems obvious but there are a multitude of
reasons for doing so. Most importantly, the seller will know that you
mean business and will not surrender at the first hurdle.
- Begin with the lowest
possible price that you
can - this will weaken the sellerís expectations. However, this low bid
will need to backed up with sufficient reasoning; which can only be
produced with detailed research into the business.
- A buyer will need to take
into account that
the seller will have supreme knowledge regarding the business.
Acceptance of a low offer may suggest that there are hidden defects or
pitfalls within the business that are not apparent at first sight, and
may need to be investigated further.
- The seller may have an
emotional attachment to
the business and may be unwilling to drop the price from the first
quote. Researching the objective business thoroughly is essential for a
successful take over. Understanding the financial position, the value
of the brand and the market conditions will strengthen your position as
- Undermine the sellerís
confidence by asking
lots of questions that will raise doubt about the business. Try to
forecast potential problems that will decrease the expected value of
the company and allow you to barter more efficiently. It is also
important however, to remain positive and not be too overly critical,
as you do not want the seller to become too defensive. Take into
account that you may need the sellerís goodwill or advice after the
sale and you may not want any bad feelings to occur.
- Enter negotiations with a
This can be achieved by rehearsing your argument and planning what you
will say during the process.
- Stay tough! This is business!
For the Seller:
- Imagine the business is a
present that will
need to be packaged effectively for maximum impact. Invest the time
into ensuring the business is in a good condition, perhaps
repositioning the business to make it more attractive for buyers.
Produce a comprehensive, detailed report that the business can be
managed profitably and eliminate all potential weaknesses or dangers
that could be identified by future buyers before they can.
- Seek advice from
lawyers, accountants and estate planners. This will help in being
objective about the sale and refrain from personal emotions entering
into the discussions. Acquiring advice and knowledge from experts will
also give you leverage in the negotiations, and will be there to offer
you support when the heat is on!
- The buyer will expect you to
business inside and out. You must be able to answer any question that
they may have, confidently. Putting in the time before the sale will
ensure there will be no hidden surprises that you were unaware of.
- Prepare a question and
answer sheet of any
questions that you may be asked by the buyer. Ask an objective outsider
from the business to overview the credentials of the business to spot
any potential issues that you may have overlooked. Anticipating the
buyerís next move or bargaining tool will ensure you are always one
step ahead in the talks.
- Before entering negotiations
you must have a
realistic expectation of what you want/need. Always start the asking
price at a higher one that you are willing to sell for. Establish your
priorities that you want from the sale and will not budge from; and
decide on the issues that you may be happy to concede.
- Similarly, know what your
buyer wants from the
sale. If you prioritise your buyerís expectations and again repackage
the business in a way that makes it look more appealing, it may be
easier to close the deal.
- If you have a buyer that is
interested in your
business, then you have a business worth selling. Stay strong in
negotiations and donít settle for less than you want!
If you're interested in buying or selling a business and would
like to find out more, please contact Izaz Ali on
About the Author
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are experts in commercial law with a heavy emphasis on Intellectual
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Article Published/Sorted/Amended on Scopulus 2013-10-31 09:06:17 in Business Articles