A lot can happen in a negotiation that can stall progress and have you stuck in a place where it feels like you’re going in circles and not getting anything done. Shifting your negotiation from a conversation where people are exploring to a conversation where people are agreeing to terms rarely happens incidentally. There’s a process both sellers and buyers can follow to help them close out quality deals more efficiently.
Closing Deals as a Seller
As a seller you can begin to guide conversations with interested parties from the inquiry phase to the serious offer phase by following the process and the guidelines below.
Inquire & Establish Transparency
If the buyer is not accepting your deal, then there might be some reasons behind it. Understanding your potential buyer and their barriers, and finding out what’s preventing them from moving forward is key.
Sellers need to try and prompt the buyer to be as open, trusting and honest as possible. Inquire with the buyer throughout your negotiation to understand what they value, and the reasons that impelled them to ask about your business in the first place. This information will help you tailor a more persuasive pitch that caters to your buyer and their motivations. It might also provide you with the reasons that the buyer is hesitant so you can see if there’s anything you can do to change their mind and close a deal.
Tip: Research shows that people have a tendency to reciprocate in negotiations. To elicit information exchange from your buyer you can begin by informing them that you’re going to share information that is not included in the listing. This can impel them to be more honest and transparent, and can help you gradually build the trust needed for a good negotiation.
Compromise in installments to ensure that your compromises are bringing your negotiation closer towards agreement. For example, rather than knocking 30% off of your asking price in one swoop, try splitting that 30% into 2 or 3 smaller and separate concessions. Label and communicate those compromises to your buyer to ensure that they feel that you are offering your absolute lowest. Your buyer is more likely to be in close out deal mode when they are under the impression that you’ve offered the best you possibly could.
Nudge when Necessary
If your negotiation has prolonged, and the buyer you’re speaking to has not made a serious offer, begin to nudge the buyer into making a decision. You can do this by summarizing all the value points and benefits your business would offer the new buyer and then inquire by explicitly asking whether they want to make an offer. If they don’t, and there’s nothing you can do to change their mind, then there’s no point in continuing the negotiation.
If you’ve made an offer and the negotiation gets stalled at a place where the buyer won’t concede, or agree to the terms you’re suggesting, begin to make it clear that concession making is done from your end. This too can impel your buyer to make a decision about whether they want to continue the negotiation or move on.
Tip: Before nudging, make sure you’ve asked the buyer what is holding them back. The impediment for them to agree could be something easy for you to fulfill.
Closing Deals as a Buyer
As a buyer you can begin to guide the conversation with your counterparty towards a deal with favorable terms by applying some of the suggestions below.
Use Contingency Contracts
When negotiators have a difference of opinion about how the future of the business will unfold, they usually try to persuade the other to change their opinion. If you disagree with the seller on key facts about the business, a more fruitful approach to helping you resolve that disagreement and closing a deal is to use a contingency contract. Contingency contracts are “If this happens, then we do this” agreements. For example, you could agree that if the business continues to attract x new customers per month, the buyer will pay x amount for the business. But if the number changes, then the buyer pays a different amount.
Contingency contracts can be used in negotiations to help both parties reduce risks related to uncertainties of the future, and resolve disagreements that would otherwise hinder a closing of a deal.
Nudge when Necessary
If you’re near the closing of a deal but need the seller to budge or concede on some aspects of their offer, you can nudge them to try and get them to compromise. One way to nudge, is to identify your alternative options to purchasing the current business, and share those options with the seller. For instance, a buyer can let the seller of a content site know that their alternative option is to purchase a starter site and build the content out themselves, or if this deal won’t work out, that they will purchase another business altogether. Nudging works well if your alternative options are similar in nature and provide better value or are priced more competitively.
Tip: This strategy only works well if the seller is eager to agree to your terms, and does not have other comparable offers.
There are a number of issues that arise in a negotiation that hinder a closing of a deal. Whether you’re a buyer or a seller, converting a negotiation from a conversation to a closed deal happens when you actively manage the exchange to impel both parties to co-seek and co-find their win-win agreement.