One of the "unsexy truths" about buying businesses the way I teach is that there are no hardcore, "super" negotiating skills required. In fact, if you have to resort to any fancy negotiating tricks and techniques then something is wrong.
It's true. Back when we were giving seminars on this subject we actually glossed over this part -- the art of the deal -- mainly because there's nothing to it. It's not like you are going to be in there trying to take over General Motors or something like that.
Instead, if you do things right, you'll be trying to buy a business from a million dollars to twenty five million dollars, max. And when you go in on these kinds of deals (especially if you use investor financing) youre already in the drivers seat because youre the buyer.
Youre the one coming in with the cash. And theres no great technique because -- again, if you do everything right from the beginning -- you know from pre-analysis the business youre looking at, market-wise, is worth a certain amount and theyre in the ballpark.
So, when you go in there, youre just gathering information and youre seeing what your gut level is. I have been doing this for 50 some years. Do you know how often Ive "negotiated" a deal? Zero times. And what happens is -- especially in the last ten years -- that many of the sellers of the businesses I buy will stay around and manage the company.
Why will they do this?
Because we become friends. I have not given them a hard time. I have not tried playing "hardball" with them. I want them to stick around and be happy, so I can keep a competent group of people running things.
And you should do the same thing. The whole "trick" is to not go after businesses where theyre in trouble and youre trying to steal something. Dont try to go in there and cut a better deal. In other words, be willing to go in there and pay market for it. And if theyre willing to sell for market, then you have a deal. This way, there are no rough negotiations going on and you won't even have to think about it. |
