Before you enter negotiation with an acquisition prospect, there are six key questions you and your acquisition team should answer:
1) What is the “big picture”?
The key here is to have just one strategic reason for acquisition that you developed at the beginning of the acquisition process.
2) What elements of the “owner’s equation” do you already know?
If you have done thorough research on the acquisition prospect, you should know many of the variables—including but not limited to price—that would prompt the owner to sell.
3) What are your options?
If the deal falls through, you need to have alternatives in mind, including possibly moving on to acquire another company in your prospect funnel.
4) What do you have to offer, in addition to cash?
Think about all the “tradeables” – car payments, keeping family members employed, etc and prioritize which ones you are willing to trade first.
5) What is their floor and what is your ceiling?
In other words, what is the lowest number the seller will accept, and at what price point would you walk away from the deal? Setting a limit beforehand and sticking to it will allow you to take much of the emotion out of terminating negotiations
6) What if…?
With your acquisition team, try to imagine some unusual scenarios that may arise and how you would respond. While you might not think of specific situations, anticipating an owner’s unusual requests can take the shock out of a moment.
Answering these key questions will help you from your objectives and build a strong negotiation platform. The negotiation platform will keep you focused on your desired outcome and give you confidence and clarity at the negotiation table.
*This post was adapted from David Braun’s Successful Acquisition, available at Amazon.com
