You’ve heard the old saying, a bird in the hand is worth two in the bush.
Another popular cliche, is that pigs get fat while hogs get slaughtered.
There’s an element of truth in many cliches, and those two cliches are no exception.
My happiest small business M&A clients are those that followed through in closing on the offer that they received to buy their business. Once they sold their businesses, they had money in the bank and the time to enjoy friends, family, charitable pursuits and the other things they lacked the time to do while owning and operating and small to mid-sized business.
Other sellers have a method of negotiating which, in my opinion is not in anyone’s best interests, including their own.
Some sellers believe they can get a buyer interested in their business by accepting a letter of intent with specific terms, only to try to change the key financial terms at the end of the transaction when closing is imminent. That’s usually doesn’t work.
Sellers who do that tend to believe once the buyer is interested and excited about the business, they’ll pay more.
However, more often than not that strategy fails and it aggravates buyers. I’ve seen sellers lose 7 figure deals because of misguided attempts to change the essential financial terms of the deal at the “eleventh hour.”
You should seriously consider negotiating “palms up” with respect to the financial terms of your deal. It will typically lead to a more successful outcome.
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