Once you have attracted a buyer for your business you might feel more relaxed. But don’t let relaxation spoil your transaction. Preferably you will have more than one buyer lined up before you start negotiating.
A lone buyer may be able to exploit any desperation. A good rule of thumb is to go into any negotiations with a figure in mind, one that may have some give in it.
But do not forget other factors that can be involved in terms of sale. Sale price is not everything and you may want to consider other factors even at this early stage – such as an ongoing equity stake.
At an early stage it is probably best to develop a relationship based on trust and don’t try to negotiate better terms.
Keep an eye on liabilities you may have to take and most importantly, make sure you have fully understood the deal on the table and can work with the prospective buyer.
The next step in the process is to draw up a letter of intent. This will cover the heads (or areas) of the agreement to be negotiated – how, when, what, why. To start from a meeting of minds at this point is essential, and the more appealing your nature is, the better you can lay claim to the areas that you feel need to be worked on. A framework in your favour will be desirable later in the day. This preliminary agreement will stipulate also what period of exclusivity should be allowed to permit negotiations. Parts of the agreement are likely to be legally binding so care must be taken even at this early preparatory stage.
Who pays fees if someone pulls out?