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You don't get what you deserve. You get what you negotiate. Before the negotiation meeting, you need to sit down with your agent and agree what you want to achieve. The most obvious objective is a good price but what does that mean? You will have valued the business as part of your early preparation and know what realistic price you can expect. Talk through the options with your agent and agree what your lowest price or bottom price will be. This is the price below which you walk away from the deal. Above your bottom price will be the fair price you can realistically expect and, above that, the price you dream of achieving. Perhaps this will be your starting price at the negotiating table. Getting a good price will not be your only objective. How long are you prepared to wait for your money? Do you want to get paid in cash and leave the business immediately or are you prepared to take a part payment and wait for the balance to be paid, in instalments, over several years? Are you prepared to compromise by waiting and achieving a higher price in return? Is the trade off worth the risk? What is your position if the offer is for an exchange of shares instead of cash? Understanding the buyer's likely strategy will help you work out possible negotiating positions. Suppose the buyer offers to buy some of the shares now and the remainder later on at a valuation to be made at that time. Such a deal involves a risk that the new owner runs the business down and you get a lower price for the future share transaction. Conversely the value may go up. Work out a strategy with your agent for dealing with such an offer before the meeting. Don't wait to be surprised. Are you willing to give non-competitive undertakings or do you intend to start again the next day in a similar business? How long are you prepared to continue working in the business and on what terms? You need to work out preferred and a fall back position for each issue and rank them in importance, ready to sacrifice some during the negotiation. |
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