The Art of Negotiation

The Art of Negotiation

Many things make a good Business Broker. Business Experience, Network, Personality, Charisma, Marketing Skills, and more. However, none are more critical than their ability to negotiate a favorable deal for both the vendor and the acquirer because, at the end of the day, that’s the end goal.

There are three basic styles of negotiation, and each has an advantage. Ultimately, the best negotiator incorporates the best of all three:

1. Assertive (aggressive)
2. Accommodator (relationship-oriented)
3. Analyst (conflict avoidant)

Apart from negotiation styles, there are ten overarching rules for negotiating. The finesse in which they are delivered is a skill not all possess and is often honed through years of experience. This is where a Business Broker is worth their weight in gold or salt.

 

The 10 Rules of Negotiations

 

RULE 1 – Start the Negotiations

A great Broker will initiate a negotiation because whoever controls the start of the talks tends to control where they end.

 

RULE 2 – Go to the Authority

Never negotiate with anyone other than the decision-maker. If there are multiple decision-makers, they all need to be a part of the process, whether face-to-face, via group Zoom calls, or group phone calls. Chinese Whispers to other parties tend to water down the negotiation and will often return an unfavorable outcome and lead to an additional need to negotiate, often ending up further away from your preferred goal.

You can ask your contact directly:

1. “Who do we need to satisfy to close a deal? How can I help satisfy them?”
2. “Who has the authority to close the deal? We need to include them in our discussions.”

 

RULE 3 – Cash is King

If you are negotiating on price, then Cash is King. If the vendor is considering an offer subject to finance and may fall through in the last hour or an all-cash, quick settlement offer, they are often more inclined to accept the guaranteed deal. Therefore, when going into a negotiation, it’s best to ascertain the acquirer’s financial position, whether they need to secure finance or if they are a cash buyer.

 

RULE 4 – Be OK to Walk Away

If an acquirer is too emotionally invested in purchasing a Business, a good Business Broker will spot this and play hardball. Similarly, if a vendor is highly emotionally invested in the Business, they may be difficult and unreasonable when negotiating. They may even decide to withdraw the Business from sale, getting ‘cold feet’.

 

RULE 5 – Shhhh

Knowing when to speak and when to remain silent is crucial. A Broker should listen to understand the issues a vendor or acquirer has and not simply listen to respond. Listening intently and understanding the issues goes a long way to bridge the gap between the two parties.

 

RULE 6 – “That isn’t going to secure you this Business”

This is a compelling phrase when negotiating and using it at the perfect moment can elevate the negotiations to a point where there is a positive result. Letting a party know that their current offer needs significant improvement can prompt them to enhance their offer.

 

RULE 7 – Always tell the truth

An ill-gotten gain by telling either party what they want to hear, rather than what is accurate, will inevitably be a Business Broker's downfall. Once trust is broken, it cannot be repaired, and people don’t deal with those they don’t “know, like, and trust.” So, no matter what – TELL THE TRUTH!

 

RULE 8 – “If I were to” technique

Often, if you offer a trade-off, you engage in conceding, yielding, or exchanging things of value. Exchanging lower value items to you and higher value to your negotiation partner is called ‘log-rolling.’

“If I were to give you an extended handover period, would that satisfy your concern and allow you to move forward with an offer my Vendor will accept?”

 

RULE 9 – Stay Cool

During a negotiation, emotions can run high. A Broker needs to keep their ‘Poker Face’ to ensure the best outcome. This involves remaining cool, calm, and collected while moving the negotiations in a favorable direction assertively.

 

RULE 10 – Clarify in Writing

If you have a verbal agreement, be sure to send an email with the points that were agreed upon laid out and request confirmation that it is correct. This helps anchor the agreement and will assist in preparing the final contract once all terms have been agreed to.

 

Further Reading

 

If you want to improve your negotiation skills, consider these books:

1. Drive: The Surprising Truth About What Motivates Us by Daniel H. Pink
2. Leadership and Self-Deception: Getting out of the Box by Arbinger Institute
3. Leadership Presence by Kathy Lubar and Belle Linda Halpern
4. Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher
5. 3-D Negotiation: Powerful Tools to Change the Game in Your Most Important Deals by David A. Lax
6. Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond by Max H. Bazerman
7. Getting Past No by William Ury
8. Mind and Heart of the Negotiator by Leigh L. Thompson
9. Influence: The Psychology of Persuasion by Robert B. Cialdini
10. 27 Powers of Persuasion by Chris St. Hilaire
11. The Art of Negotiation by Michael Wheeler
12. The Power of No by Allan Green
13. Inked by Jeb Blount
14. The Art of Persuasion: A Guide to Mind Control Through Powerful Persuasion Techniques by Jacob Clarke

Pro-Tip: Download these books in audio format and listen to them while driving, working out, cleaning, or during other activities to better utilize your time for ‘Income Producing Activities.’ I use www.audible.com.au

Tags: negotiations small business coaching

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