How Do you - Negotiate a Final Business Sale Agreement

When negotiating a deal, ask the seller to bring together all the interested parties so that full attention can be given to the deal and an agreement finalised as soon as possible. Express your interest and your determination to finalise a deal because this is what the seller is looking for. If the seller can see that he/she has an advantage by moving fast, this process would usually be speeded up.

The process of negotiating an agreement involves more than settling on the final price. There will be other issues to be agreed to between the parties, such as the transfer of any contracts, obtaining finance, transfer of staff and staff entitlements, assignment of insurance policies and leases, etc.

The negotiation usually begins with the seller setting out the asking price of the business. This is the final asking price because during the process of investigating the business, things may have changed as the buyer brings up issues that the seller may have backtracked on or amended.

You don’t have to accept the seller’s final asking price first time round because it should be able to be reduced once other matters are brought to light that require a price adjustment. The best response to the seller’s asking price is to put forward your own offer based on your investigations. This may cause concern to the seller initially, but after discussing the reasons why you have offered that figure, things will usually settle down.

You always have to provide supporting information and reasons why you believe the business is worth what you are offering. If the seller accepts your first offer, it is a sign that your valuation was probably too high and therefore you should try and make an amended offer on the basis you may have forgotten something and the original offer should be adjusted.

Be careful, because at this stage the seller may see what you are up to and he/she may feel they have the power over the negotiation. As the buyer, do not convey too much excitement or too strong an interest. If the seller can see from your reaction and body language that you are eager to complete the purchase this will weigh against you in the final price negotiations.

What usually happens is that through offer, counter offer and negotiation, the final price will be somewhere between the sellers price and your price.

Once you come to an agreement, the final figure should be set down on paper so that the next stage of finalising the settlement can progress.

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