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Negotiation Tips For Owners: Strategies For Business Sellers Selling A Small Business

Posted By: Business Broker, SF Bay Area

What are some of the better negotiating tips for business sellers selling a small business. In this Discussion I will list several key strategies I feel work and have others comment on them as well.

Tags: for sale by owner, selling a business

Great article Craig.

The first thing I think helps reduce the chances of a deal going sideways is to have a long due diligence period, between 10-14 days, and also right before I go to escrow I go to the landlord and get a feel if the buyer will able to be approved. I try to get the buyer to show commitment by getting a check for $10,000 to open escrow. Yes, the buyer can always back out and get their money back, but if they only want to put $2,000-$3,000 as an initial deposit, then that doesn't show a lot of commitment, because although it is $2,000, some people would just walk away from that, so at least with $10,000 they have some skin in the game.

When taking the listing I tell the seller that everything that is in the store the buyer is going to want, so if the seller says, "oh that 62" TV on the wall, I'm taking that when this place sells", I tell them to then take it out now, because if a buyer sees it, they'll want it.

Another thing I think is important, that as the broker, we set the pace of the transaction. If a buyer wants some sort of concessions, then get them to write it down, nothing "per telephonic conversation". I try to present offers and counter offers in person, because things can be easily dismissed by either party over the phone. I try to slow the process a bit. I think you can tell when a transaction is going to blow up most of the time, and so you have to ask yourself, are they really trying to get concessions or find a way to back out of the transaction.

I also have the buyer do training (2 weeks, most of the time) after escrow, not during. If the buyer starts training before escrow closes, then that opens it self up to all sorts of problems.



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