Negotiations
Firma Consulting offers specialised assistance for business purchase negotiations. Negotiations are probably the most difficult step in the complex process of buying or selling a business. It is impossible to specify in advance the ideal way to participate efficiently and appropriately in any set of negotiations, as the nature and type of negotiation may be as variable as the negotiations themselves.
These differences are due not only to how much firms differ from each other, but also due to the broad spectrum of individuals joining in such discussions. Nevertheless, a few aspects of negotiations on buying and selling businesses stand out in particular, so some of these aspects are discussed briefly below. Please note, however, that the few aspects mentioned below are only a few of many and should by no means be considered as all or even most of the points which must be kept in mind concerning negotiations.
Preparations - gathering information. As in life itself, if you wish to succeed you have to prepare yourself carefully and do all your homework conscientiously. This advice applies perfectly to the negotiations that take place when buying or selling a business. Whether representing the seller or buyer, the parties on both sides of the negotiating table need to prepare themselves adequately. The better prepared they are when they come, the greater their chances are of reducing the suspicions inherent in such discussions.
Indeed, mutual trust is in fact vital for negotiating the purchase and/or sale of a business. Upon starting such negotiations, each step should be of moderate length and taken one at a time. Negotiations must occur through a number of meetings and other communications, allowing the parties gradually to acquire reliable information and secure the grounds for a potential transaction. While the initial stage of negotiations should definitely be utilised to get to know the other individuals at the negotiating table, it is in general mostly dedicated to obtaining information. When this stage is over and acquaintances have been made, negotiations can be set in a higher gear.
Mutual confidence may also begin to appear, which is essential for further negotiations. It will definitely pay off to complete the above matters properly, prior to talking seriously about any prices. Many find it preferable to appoint a specialist for the preparations stage, because sometimes points come up regarding the business which are based on a mere misunderstanding or clumsiness but may be difficult for the business owner/seller to accept. For one thing, the owner/seller frequently feels emotionally connected to the business and is therefore sensitive to any negative remark that might be made about it. This may be exacerbated by the owner/seller's lack of experience in negotiations on selling businesses.
Price negotiations. Ideally, no price discussions should occur until a foundation of dependable information has been built up on which a transaction might be based. The more reliable and accurate the information on the business is, the better. Both parties must also understand this information in the same way, to reduce the risk of misunderstanding later on when grappling with prices. In nearly all cases, it may be preferable to let a specialist handle this stage, as s/he can apply professional reasoning as much as possible without becoming emotional. The seller and buyer can then each remain unoffended and unhurt off-stage, content with taking decisions when and if a sale develops. This will in most cases matter to both of them later on too, since they will probably continue to communicate about the business and its affairs after it has changed hands. Both of them have an interest in the firm's prosperity following the sale: the seller at least emotionally, the buyer for financial gain.
Establishing the price. When the sale has been clinched, both the seller and buyer need to have the same understanding of every principal point in the transaction about to occur. The seller's and the buyer's representatives must review every material aspect of the transaction, with specialists examining all documents relating to the purchase and approving them before the seller and buyer sign the final contract. This is to prevent any misunderstanding that might otherwise arise.
Together with many others, Firma Consulting believes that the best transaction when businesses change hands is a transaction in which both parties manage to profit - the seller as well as the buyer.