Art of Negotiating a Business Transfer
Wednesday, September 8th, 2010
Negotiating a complex transaction like the sale or purchase of a business requires technical proficiency, sensitivity to the motivations behind statements from both sides, and creativity. A potentially great deal can be lost by focusing too much on the bottom line. The artful negotiator finds common ground, engages the parties on both sides of the transaction, and listens carefully for their real desires and needs. These undercurrents reveal opportunities to craft an agreement that might not be possible by traditional means.
Van recently assisted in the purchase of a service business that had been appraised significantly below the asking price. By listening carefully, examining financial data, using his intuition and offering options and advice, Van helped both sides talk about what they really wanted from the deal. The seller was ready to retire, and he wanted a steady income stream for years to come. The buyers saw potential to grow the business because of their strong ties to the community, but traditional bank financing was not a good option in this era of tight credit.
In the successful agreement, the seller is financing the deal. This bypasses the problems posed by traditional financing methods and gives him a regular income stream at a level the buyers feel is manageable. It’s a workable deal that might not have happened without the intuition and creativity that Van provided.
This artful approach works for both the buyer and the seller and in other situations where a negotiated agreement is desired, such as a property settlement in divorce. In the end, everyone involved must feel good enough about the deal to commit to it by signing the agreement. In this case, a well-established business in the community will continue because of this successful transfer agreement.