Buying a Business is Not a Zero-Sum Game

Buying a Business is Not a Zero-Sum Game

NorthBridge Business Advisors

Earlier this week I had a discussion with a colleague about unique styles of negotiating. We negotiate in business and our daily lives. I would like to think that everyone pursues that often-used term of “win win” in negotiations, but let’s face it, some people view negotiations as a zero-sum game where the other party must lose in order to win.

If you are buying a house and want to grind out the last detail to impact the price that is an approach. You might justify it by saying that it does not matter since you will never see the owner after the sale. If that is how you want to proceed, it may say a lot about you, but it is unlikely to create a post-acquisition disaster.

Buying a business is completely different. I tell business buyers that after the sale, the buyer still needs the seller. The owner needs to transfer detailed knowledge of the business to the extent it is not well documented. There is also the priority of retaining customers. The seller has known these customers for many years and has gained their trust. The seller is not going to betray that trust when the customer asks about the quality and integrity of the buyer.

The business buyer needs nothing less than a full-throated endorsement from the seller to all customers and complete cooperation in the business transition. If that cooperation is jeopardized because of friction developed during negotiations, it is quite likely that anything “won” at the closing table will be lost several times over post acquisition.

I am not suggesting that buyers and sellers should not achieve a fair price. Qualified business brokers can help both parties determine a fair price for a business. However, if you view business acquisitions as a zero-sum game, it might be worth reconsidering your approach or stay away from buying a business.

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