First-time sellers need an industry expert advisor by their side
Imagine you are selling your business and attempting to negotiate the asking price and terms. The buyer makes a soft offer well below what you expected or hoped. If the buyer is a good match and you’d like the deal to progress, what do you do next?
From almost 50 years in the buy-sell arena, we know a good match is worth fighting for.
In my column in Label and Narrow Web magazine, I explain how success in the buy-sell arena starts with understanding how and why a buyer will negotiate – and what they may be willing to trade.
Making a trade with an experienced buyer is not for beginners. First-time sellers need an industry expert advisor by their side. LaManna Consulting Group is experienced with both sides of the transaction, which gives us insight into the areas where buyers may be willing to “give to get.”
It all starts with a current valuation prepared by a specialist in your industry. We’ve seen valuations prepared by outsiders, and there’s no appreciation for the graphic arts or the strengths of specialty printing-converting businesses. Some valuations are prepared by someone with a bias against print. You need to start with the right data and someone who knows how to interpret it.
Once you have a good idea of what the market will bear, you can craft an asking price package that is tempting to buyers without being so low that it causes concern.
You are more likely to entertain offers in an acceptable range if you start with a realistic asking price.
Once you complete the valuation and determine your asking price and ideal package, we prepare a list of things you, the seller, might be willing to compromise on. It may not be an issue, and you may not need to compromise.
However, experienced buyers know what they can ask for and which buttons they can push to put you in a defensive posture. Again, having a trusted advisor helping you through this process is essential.
When we counsel sellers, we tell them not to give up too much too early, even if they are motivated. There is a cadence to negotiations that comes with practice. Agreeing to a concession smoothly and receiving what you ask for in return is a powerful feeling. It’s why many of our clients retain us to help them buy another company – and return to work with us again and again.
With your list of concessions, you look at how you can give something of value to get something in return. A buyer doesn’t always seek a lower price – that’s a myth. Your advisor will help you see where there might be traps in a higher-priced offer.
In my article, I give four scenarios where the seller was able to skillfully gain leverage by making concessions. Understanding your strengths and weaknesses will give you a better chance of negotiating a better deal.
The key to negotiating powerfully is to prepare your “advance.” You want the most potent evidence and powerful positioning ready when you put your business on the market. You will be able to negotiate from a position of knowledge as an educated seller, and you will know when it’s appropriate and strategic to trade a concession to keep a deal moving.
Here are other points from my article that will help you as you prepare your business to sell:
- Your success as a seller depends on handling negotiations with give and take – and emotional maturity.
- You may be motivated to sell your business due to particular circumstances or a compressed timeline. I list examples of those situations in my article. You can still command a fair price and advance the deal through intelligent negotiations.
- It may seem as though there are hundreds of buyers for every graphic arts business for sale. However, a match between seller and buyer with chemistry, synergy, and a good culture fit is usually the deal you want to see through to the end.
As the seller, you must keep track of your total concessions. Financial value is an easy way to tally the value exchange when trading concessions. Your advisors can educate you on other ways to calculate the give-and-take required in negotiating.
In the buy-sell arena, your coach and advisors will help you decide what’s worth trading and where it’s crucial to stand your ground. Even the most straightforward transactions have an element of strategic gamesmanship that can be used to your advantage.
Most successful deals require some level of compromise. Making a concession can help keep a deal moving. Your best bet is to choose a knowledgeable advisory team that can help you evaluate each phase of negotiations and look out for your interests.
My team has prepared a special download for sellers: Code Red: 12 Seller Mistakes. This free guide can help you visualize this part of negotiating during the sale of your business.
How you react to the buyer’s negotiating tactics is an advanced negotiating tactic. As I explain in my column, it takes self-control and a willingness to make well-planned and strategic concessions to keep the deal going. That’s how you get to a win-win scenario in the buy-sell arena.