Here in the United States, we rarely engage in the art of bar- gaining. It isn’t culturally com- mon. The term has been rel- egated to discount shopping and quaint flea market week- ends. And while we joke about driving a hard bargain, few of us actually know what that
entails. Frequently, we fail to recognize the fine line
between fair and harsh, and we commonly fail by forgetting how to effectively engage with our “opponent.”
So it’s no wonder that many people find business
negotiations intimidating. Whether we are buying a
car, putting an offer on a home, or striking a business
deal — those foundations based in bargaining simply
aren’t there. Together, however, we can fill that void.
Specifically, let’s examine what buyers and sellers of
small businesses need to know about entering, negotiating, and closing a sale.
At its most basic, there are three components to
every negotiation: the buyer, the seller, and the object.
Frankly, for the purposes of this discussion, the object
doesn’t matter. Property, as it is understood in common parlance, has no opinion and does not influence
the negotiations beyond its intrinsic value. Set it aside.
That leaves the buyer and the seller. Now, before we
delve into the nuances of each role, I want you to reorient your frame of mind.
Too often we think of negotiating as a competitive
sport: Team A versus Team B — each side trying to
“win” by the largest margin. That is a guaranteed
way to sabotage a potential (and promising) partnership with resentment and ill-cooperation. The transition of a private practice is an extended negotiation
that can easily take 12 months. Attacking the process
with an excessively aggressive attitude will result in
all parties feeling frustrated, stressed, and dissatisfied. It may even dissolve the deal entirely. Instead,
change your perspective. View negotiating as a collaborative sport with two teams working together towards a common goal. Now you’re ready to dive into
the nuances of turning a negotiation into the pursuit
of a stellar match.
The Seller’s Perspective
As the seller, you have built your private
practice from the ground up. You are
rightfully proud of your creation and
would like to see it continue beyond you.
Therefore, it is vital that you not only
find the right purchase price, but also the
right purchaser. Either on your own or
with the advice of a transition specialist,
decide what that means to you. Because
you aren’t peddling for pennies, it is in
your best interest to be picky. The most
important step in finding the right buyer
is knowing what you want and knowing
your ideal plan.
What is your exit strategy? Some
people are very hands-off. They want to
vanish with the conclusion of the sale.
Others linger, supervising or shadowing their protégé for years. Your best
option lies somewhere in between.
Remaining present in a mentorship capacity for a set amount of post-sale time
will both ease the transition of goodwill
and add value to your sale without
crowding the new ownership. Critically,
though, is what you would prefer and
what you are willing to do.
What is the range of your asking
price? Selling your business isn’t an “or
best offer” scenario. Have at least one
professional appraise your business.
Then discuss your comfortable price
range and possible points for negotiation with a broker or transition specialist.
You need to be realistic with yourself and
transparent with your buyer. Neither of
you is going to appreciate surprises down
What kind of deal structure do you
want? There are several ways money and
ownership can change hands. Clean-cut
cash payouts may seem alluring, but ex-
Making a Stellar
by Justin D. Farmer
STRIKING SATISFYING BUSINESS DEALS