Adding Value – Negotiation

Negotiation is an essential element in the business sale process and one that can yield very significant value to the seller. It is however one that can be stressful, demanding and confusing.

Having negotiated many deals over the years we have bought together our experiences to list essential things to keep an eye out for during negotiation:

• Deal structure is key, and clarity should be established early in the process. Understanding what should and should not be in the Heads of Terms is important to prevent future value erosion.

• Price chipping: we have found that all too often CEOs and MDs or even Chairman demand a last-minute price chip for their signature. The key is to hold your nerve and see this through. An experienced corporate advisor will take this in their stride, they will be used to it, expecting it and be armed to deal with it.

• Relationships: it is key for the acquirer and the owner-manager of the business to maintain a good relationship with the buyer. It is likely that they will need to work together for a period of time post-sale, so maintaining relationships will certainly help.

• Communication: negotiations starts from the very first communication you have with the potential buyer and they continue up until the final signature. Never forget this.

• There are many maxims, but our favourite is “the steel hand in the velvet glove”!