The whole goal of an M&A transaction is to have both parties reach an agreement that satisfies their wants and needs. The path to the optimal outcome is one that requires excellent negotiation tactics.
Here are some top negotiation tips that can help make your next sell-side transaction a financial success!
Stick to Your “Walk Away” Number During M&A Negotiations
No matter how badly you want your business to sell, you must always enter negotiations with a “walk away” number and stick to it. An M&A investment banker can help you understand a reasonable sales range for your business.
Your business has been your life’s work—don’t settle for less than you deserve. Go into the deal with a well-researched number as your final threshold; let that number be your motivation for staying loyal to your hard work during this exciting move in your career.
Put Your Concessions First
Even the most skilled negotiators make concessions, but when they do, they always receive value in return. Before offering a concession, make sure you identify and request something of reciprocal value from your buyer.
Here are a few tips for ensuring that “the juice is worth the squeeze”:
- Make it known that you’re giving up something of great value. After all, this is your life’s work you’re putting on the line! Once you’ve let your buyer know how important your concessions are, you must clearly define how your buyer can reciprocate—and then ask for it.
- Always have a contingent concession in mind. For example, if your buyer can adjust some of their demands in one area, then you may be more open to conceding something else they want from the deal.
- Don’t concede everything all at once. Finding 5 dollars on the ground each day with the promise of more later is more enticing than 20 dollars at once with no further gain in sight. Keeping concessions in your pocket also gives you ammunition for later concessions from your buyer.
Observe Your Counterpart’s Habits
Negotiation methods and tactics vary from individual to individual. It’s important to pay attention to how potential investors or buyers handle themselves during negotiations. Does your buyer respond better to proposals in one-on-one interactions or in large group meetings with their board?
Take note of situations that make your buyer more likely to agree with your points and try to replicate those during the negotiation process. Catering to your buyer’s preferences creates an environment much more conducive to their concessions.
Hire an M&A Advisor
Abraham Lincoln once said, “He who represents himself has a fool for a client.” This statement absolutely rings true for your sell-side deal. No one can help you navigate through tough negotiations like an experienced M&A advisor. It’s been proven that owners who enter the negotiation process without assistance will most likely fail at obtaining maximum value for their business.
Kratos Capital’s investment bankers have extensive experience in business transactions, allowing them to effectively represent the value of your company and offer advanced negotiation tactics. Our investment bankers also help with:
- Adding credibility to you as the seller;
- Structuring the transaction; and
- Managing the M&A process from introductions to completion.
Count on Kratos Capital for Negotiations that Produce Results
Don’t leave thousands on the table in the aftermath of a mismanaged transaction! Let the experts at Kratos Capital, LLC help you make winning decisions during complex transaction negotiations. Contact us today to find out more about our services and how we can help you obtain maximum value with your M&A transaction.