Sometimes negotiations get tense. Emotions overcome logic. A big part of our job as financial advisers is being the barrier that absorbs that emotion and keeps a deal on track. For an owner-manager in particular, deal negotiations can quickly feel personal. Removing yourself from this is one of many significant benefits of appointing a professional advisor to negotiate your deal.

"As an advisor you have to master your emotions and remain focused."

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But even advisors aren’t immune from emotional overload. I’ve lost count of the number of times a less sophisticated counterparty has used personal affronts and emotional levers to try and get their way. As an advisor you have to master your emotions and remain focused.

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There’s a lot of hard work and hard data involved in securing a sale, but it’s also an art, a craft if you will. The reality is that each deal, business and owner is different. These complexities can include understanding specific buyer value drivers, strategic positioning to create competitive tension (be that between bidders or simply through the ‘fear of missing out’), and being able to successfully overcome deal hurdles or buyer objections – all of which form much of the ‘art’ of deal making.

"Confidence is key to deal making."

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Business has changed over the years so even ‘fraught’ negotiations are nothing like the big public company hostile takeovers of yore. The key is to ensure that you have employed a financial advisor who has prepared you and your business for a sale process and made it as attractive as possible to a range of potential buyers. However, most importantly, it is vital that there are no hidden surprises so buyers know exactly what they are buying right from the outset. You don’t want anything material emerging down the line. Confidence is key to deal making so you must build a foundation of trust with the buyer.

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"Like a good game of chess, you have to be able to think four or five or more moves ahead."

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Deal craft also involves focussing on the common goals between parties in order to find a way through any impasse. Inevitably, any negotiation, which all sales involve to some extent, requires compromise. Understanding the points that really matter and the points on which compromise can be reached takes experience and foresight. Like a good game of chess, you have to be able to think four or five or more moves ahead. To be able to do that takes a huge amount of deal experience; if you find yourself reacting to what is in front of you without fully understanding the consequences of your next move, you are likely to come up short against an experienced player.

While it is impossible to predict the specific issues that might arise during a deal, it is, in my experience, almost certain that some will occur so you need to be prepared in terms of your goals, the figures and, perhaps most importantly, your emotions.

We work with UK SMEs and small-cap PLCs that have the ambition to grow their business by acquisition. We often act as an outsourced Corporate Development team helping clients meet their strategic goals through mergers and acquisitions. Our value lies in helping clients build rigour into the acquisition search and execution process. For a confidential, independent, no obligation discussion on how to buy or merge with another business, click the 'Let's chat' button.