Cash In: Final Negotiations

admin July 5, 2015 Comments Off on Cash In: Final Negotiations

Here are my thoughts on Final Negotiations for a significant sale. Let’s say there is no breakthrough. They’re at $320K and you are at $520K. You can’t agree and neither side sees reason to move. You either have to do something creative or you need to stop. Here are some tactics that might be useful in breaking a deadlock.

Quick Tactics in Final Negotiations

Final NegotiationsRevisit Interests: Is it really the price or is it the terms? Can you make a concession on the down payment? Can you accept a graduated payment plan? Dealing with cash is often the easiest way to start a fire.

Make a Concession: “Okay, I will take $10,000 less as a down payment. Now what will you do?” Once you concede you can’t go back, but often the risk is rewarded.

Take a Break: suggest a time out. Refocus, allow emotions to cool and keep tensions from escalating into conflict. After all, both sides wants this deal to happen.

Another Party: turning to a disinterested party to mediate may help. This could be a banker, consultant or a mutual friend with a high business IQ. If the other side suggests this and you’re not comfortable with the person, don’t do it. It’s just like you would understand if they didn’t agree with someone you recommended.

Sharing the Risk: are there opportunities to share the risk? Do you feel secure enough to offer a deal based on performance hurdles? They pay the full price if sales are maintained and, if they fall short, they would pay less. 

Allow Time: It frequently takes months for a business sale. Don’t imagine their response before you get it. Sometimes we are our own worst enemy. Don’t begin a new round of negotiation until all the previous points are covered.

Terminate: if you’re at deadlock, just don’t stay there. After appropriate time, terminate–say you’re sorry no agreement was possible, “However, I hope that things might happen where we can get together again.” Always be cordial. Don’t burn bridges. This may encourage movement if they are concerned someone else will get their prize.

The Ultimatum in Final Negotiations

Ultimatum: They approach you with their “final offer.” You have 48 hours to respond. It’s for $380K. You have a couple of alternatives. One is to ignore the ultimatum and use it as a new low Reference Point 

Of course, ultimatums sometimes are what they seem: ultimatums. However, since this is my story, we quickly assessed: we were at $480K and they now are at $380K. How about offering to split the difference (bracketing) now? That would be $430K. And that’s what we did and an agreement was reached at $430K. 

Recap: our Minimum Deal price was $300K and we got $430K. This is a better deal than our Worse Case Alternative, although certainly not at our Target Price of $500K (remember $550K was just our first offer). But close enough. And that’s how it works.

Conclusion on Final Negotiations

People don’t buy rationally, regardless of what they say. Many times negotiations fail because of irrationality. Don’t let it affect you.

People do business with people they like and who are courteous. On the flip side, people break off with people they don’t like or trust, regardless of price.

Remember the deal is never done until all the paperwork is done. Involve your attorney every step of the way.

Cover the little things–don’t skip things like how you are going to value work-in-process at the day of the closing as well as inventory. Little things can turn a good deal into a court challenge.

This in no way covers everything about negotiating but I hope it has been a start. When you have the opportunity to attend a seminar on negotiating, read a book or buy a video, I’d suggest you do it. Negotiation is the essence of what we as business owners do but we need all the help we can get on significant negotiations. Study it and you will improve your deal.

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Receive daily email training messages as well as have access to our short (8 to 10 minute) printing-specific training classes on product knowledge and selling through the new CPrint Academy. $495 for a year’s subscription covers everyone in your shop. Go to www.cprintalliance.com for more information. Message Tom at tom@cprint.com or reach him at (304) 541-3714, connect on Facebook and LinkedIn and follow his business tweets on Twitter @tomcrouser. Tom is Senior Contributing Editor of this magazine, chairman of CPrint® International and principal of Crouser & Associates, Inc., 235 Dutch Road, Charleston, WV 25302, www.cprint.com.

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