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3 Negotiation Tips For Buying a Business
By Quiet Light
Buying a Business? Here’s How to Win Over Your Seller and Broker
Have you ever wondered what the difference is between a successful entrepreneur and a mediocre one? The ‘secret sauce’ that makes someone a good buyer and helps them negotiate a better price on a business acquisition? You might be surprised at the simplicity of the answer.
Just treat people well. That’s it. The key to being more charismatic, closing deals faster, and making the whole process of buying a website less stressful is to be a nicer person.
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Selling an online business can be an emotional experience. The best buyers understand this and are able to step back from the deal and see the person behind it. That manifests in a few common traits — a few qualities that every good buyer shares.
Here’s what our brokers have to say on the matter.
Be Likeable (Joe Valley)
As the old saying goes, you catch more flies with honey than vinegar. We’ve already written on why it makes sense to be likable and courteous during a business negotiation. A rude, condescending buyer not only alienates the seller, but may also make their own broker hesitant to work with them.
But what’s involved in being likable, exactly?
- Be friendly.
- Assume positive intent.
- Listen to what the seller has to say.
- Try to find common ground with the seller – areas where your shared experience overlaps.
According to Joe Valley, this has the potential to net you some serious dividends.
“One of the smartest buyers I’ve worked with started by building rapport with the seller, then asked for the world when it came to his offer,” he recalls. “Most of his requests were denied, but the seller made a concession on a fairly major one. There’s little doubt in my mind that if the buyer hadn’t made a great impression on the seller, his offer would have been scoffed at.”
“Look at things from the seller’s perspective,” he continues. “Parting with a business they built with their blood, sweat, and tears can be difficult. Approaching them with this knowledge and treating them as a person rather than an acquisition target will always help you get a better deal.”
Thank The Seller (Mark Daoust)
If you treat others with fairness, respect, and kindness, they’ll be likelier to reciprocate. If you only look out for your own best interests, people will respond in kind. That’s the advice given to us by Quiet Light CEO Mark Daoust.
“In my experience, to close the deal and finalize a sale, there needs to be a lot of trust and goodwill between buyer and seller,” he explains. “There are going to be a lot of points throughout the due diligence process when you don’t see eye-to-eye. Don’t let that devolve into antagonism.”
“Too often, buyers think they’re doing sellers a favor in purchasing their business,” continues Daoust. “They fail to recognize that this is an exchange of valuable assets, and the seller often picks up on this attitude. Making matters worse, buyers often complain about sellers having ‘unreasonable expectations.'”
“A seller is under no obligation to sell to you,” he concludes. “By thanking them, you recognize that the seller chose you for the sale. It has a powerful impact and can lead to new partnerships, friendships, and opportunities down the road.”
Communicate, Communicate, Communicate (Bryan O’Neil)
Courtesy and respect aside, there’s another quality greatly appreciated by both brokers and sellers — responsiveness. There are few things more frustrating to brokers and sellers than dealing with a buyer that doesn’t communicate. When a potential buyer goes quiet without warning, it often feels disrespectful, as though the buyer doesn’t value anyone else’s time.
“I’ve dealt with buyers in the past who vanish for long periods of time, only to resurface with a few questions then go missing again,” says Bryan O’Neil. “It’s super important to stick to swift communication. If you’re going on vacation or need a few days to think things through, send a quick note to the seller instead of leaving them guessing.”
Responsiveness aside, what a buyer says is just as important. Often, someone will put an offer in on a business solely because they don’t want to let a potential business opportunity fall to the wayside. Only after they’ve made the offer will they start asking questions about the business; they may not even have any intention of making a purchase.
“There is no excuse for putting in an offer just for the sake of it,” states O’Neil. “Only make an offer if you’re reasonably confident you’re going to follow through with the acquisition. Don’t waste the seller’s time with unnecessary questions, and try to get as many of your pressing questions as possible answered before the due diligence phase.”
“Finally, putting in an offer only to retract it later is a good way to end up on a broker’s blacklist,” he concludes. “Every broker has a list of buyers and sellers we refuse to work with again — and like any professional, we share war stories with our colleagues.”
Courtesy Will Get You Everywhere
So, in summary, the best buyers all share a few common qualities.
- They’re likable and approachable.
- They’re polite and courteous, even when they don’t have to be.
- They’re responsive, promptly answering phone calls and emails.
- They have respect for the seller’s time and only make genuine offers.
Life isn’t like Mad Men or Suits. Ruthless business people might get ahead in the short term, but a career spent alienating and tearing strips off of people will ultimately end in disaster. Eventually, you’ll reach a point where nobody wants to work with you anymore.