Buying an Existing Business – Sealing the Deal!

Following on from our earlier post this week, we thought we’d pick up where we left off and go through Real Business’ tips on ‘sealing the deal’ when it comes to buying an existing business!

We’ve already heard that 8 in 10 companies go under during their first year of operation, and one way to avoid such a situation, is to purchase an existing company. Now you’ve read the advantages, but how do you go about finalising that all important deal? Real Business states that buying a business is just like buying any other item – although the stakes are much higher! They set out the following checklist to have in mind when purchasing such a business:

  1. Have a price in your head. You should think of this as a property deal, in the sense that no-one would blindly accept the figure the vendor wants. So with that in mind, you shouldn’t enter the bargaining process without a solid figure in your head – and to never accept the price the seller initially offers without careful consideration.
  2. Start low but back it up with justifications. Always start negotiations with the lowest possible offer – ensuring you can justify the reasons as to why you’re offering this amount. It is crucial that you undertake your research – looking into every aspect; pulling up statistics and providing analytical facts to back up your lower offer.
  3. Remain tough and don’t reveal anything. You cannot afford to be on the backfoot, so if you start the process in a friendly way, you open the opportunity for the other side to take a more dominant stance in the negotiations. Always keep things vague, and as open as possible – it is essential that you don’t give the other party any ammunition that can be used against you, or to make you pay more for the business. Providing financial information as to how much you could offer for the business will only serve to encourage the other side to reject any lower offers.
  4. Don’t respond to flattery, and remain indifferent. If the other party grants a concession to you as part of the deal, it can be all too tempting to respond warmly. It is therefore extremely important that you remain tough and unemotional. This will ensure the other party thinks that you are a successful and busy entrepreneur, who may have many other options.

You can read the full article here

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