Negotiating The Price of a Business for SaleOkay, youíve found a promising business to buy, so now what do you do? The fun part of negotiating price and terms with the owner or broker, is about to start. When buying a small business you might be dealing with a business broker, the Seller or an lawyer acting for the Seller. I have found it can be more difficult time in negotiating directly with the Seller. This is because the Seller is more emotional about his business and usually hasnít properly prepared himself or his business for sale. (But, I still like negotiating directly with the Seller most of the time.) For example, he will want all cash, which rarely happens in selling a business. After reading my book, you will learn not to let yourself get emotionally involved with the Seller.
A good business broker, which is usually not a real estate person, will explain to the Seller how the market works and will evaluate the business, not under pricing it and not over pricing it, but finding the true market value. He will convince the Seller into negotiating offer terms. Be careful, some brokers will go along with the Sellerís dream price and list a business for sale, much too high, just to get the listing.
In three months when the business hasnít sold, he will go back to the Seller to renegotiate a lower asking price and terms. Track this type of listing. Visit the broker and go through his inventory of businesses for sale to find this motivated Seller. Sellers trying to sell their own business simply do not know the rule of the marketplace and will try to sell their business before listing it with an agent.
Every Seller has a Dream Price
If you can find this Seller before he lists his small business with a broker, you might be able to cut a better deal working directly with him. By this time, he is usually more motivated because his business has been low-balled a couple of times. At least three negotiating deals have fallen through and one was for all cash! He has been getting bad advice from everyone around him, including his professional advisers. His wife has already bought tickets to Hawaii and mentally they have both checked out.
About the Author
Dave Meholovitch has more than 35 years experience in building, buying and selling businesses. Dave is the Author of the e-book Who Wants To Be The Boss. In his e-book Dave shares his skills and knowledge about buying or starting a business with no money down. Click Here to find out more about Dave's E-Book.