6 essential negotiation steps for rookie business-buyers

The goal of any acquisition is simple:

To make a ton of money.

And to make the most money possible, you’ll need to master negotiation.

The good news is, you don’t have to be an expert from day one.

Avoiding the most common rookie mistakes is enough to massively improve your chances of a smooth, profitable first deal.

Here are a few “dos and don’ts” of acquisition negotiations:

1. DO: Insist on exclusivity

Make sure your letter of intent (LOI) includes an exclusivity clause.

This guarantees you’re the only buyer the seller is negotiating with.

Without it, the seller can waste your time by using your offer to shop around for a better deal.

2. DO: Focus on written agreements

Verbal agreements are worthless.

Make sure all terms, from price to future commitments, are documented!

This includes terms on things like:

• Client lists

• Supplier contracts

• Employee retention

This will protect you from potential scams and flaky sellers.

3. DO: Build a strong team

Consult with industry professionals when doing market research and valuations.

And before starting negotiations, assemble a team that includes an M&A advisor, an accountant, and a lawyer.

Everyone should know the ins and outs of acquisitions.

Their expertise will help you spot red flags and save you from costly mistakes.

4. DON’T: Ignore seller signals

Don’t waste time with a seller who’s not open to realistic offers.

I once tried to negotiate with an unreasonable seller, back and forth, over five times, to get them to see that their business was worth half their asking price.

It only led to frustration.

Know when to cut your losses!

5. DON’T: Get attached to one deal

Most new buyers get stuck on this point!

It’s easy to fall in love with a business, but don’t let emotion cloud your judgment.

If the price is too high or the terms aren’t right, just move on.

There are always other deals out there.

6. DON’T: Waste time on unwilling sellers

If a seller keeps:

• Delaying meetings

• Giving you incomplete information

• Or throwing unrealistic valuation numbers at you

Then it’s probably not going anywhere.

That said, not every deal is dead at the first sign of trouble — sometimes patience pays off!

When I bought an ATM route, I negotiated for over three months.

The seller dug into every tiny little aspect of the deal.

But, I knew they were acting in good faith. So I didn’t mind the wait.

You’ve probably noticed a common theme here...

One of the strongest negotiation tools you have is the ability to walk away.

And it shouldn’t be a bluff!

When you're genuinely willing and able to walk away from deals, you'll have the power to negotiate on your terms and get the best price.

If you’re interested in more step-by-step guidance on how to acquire your first business (or passively invest as a silent partner):

Fill out our 2-minute Investor Survey here.

Stay tuned for more acquisition tips and strategies!