The Art of Negotiation: 8 tips when selling your company

I vividly remember getting ready for a call with the CEO of my buyer. 

knew it was a critical moment – we were thrashing out the price and key terms that would be agreed in the Letter of Intent.

This call was a defining moment for our sale. There were literally millions of dollars on the line, and it all hinged on how well I handled the next 30 minutes.

The difference between a good and a great outcome comes down to a handful of pivotal moments when key terms are negotiated.

These moments come up at every critical stage of a deal:

• The first discussion about valuations, where you set and justify your expectations on price
• Pushing back on their first draft of the LOI, when you set out your non-negotiables
• Working through a potential deal breaker issue in due diligence, when you need to convince the buyer to continue with the deal
• Overcoming a deadlock issue on a key terms in the sale contract, when you need to find a compromise
• Facing a dreaded price chip, when you need to hold firm on the agreed price

Good negotiation is about strategy, psychology, and preparation. 

To help you handle these moments with confidence, here are my top tips for negotiating in M&A.

1) Never Split the Difference

Firstly, a book recommendation.

"Never Split the Difference" by Chris Voss is a seminal book on negotiation, and many of the principles apply wonderfully to M&A.

A former FBI hostage negotiator, Voss introduces strategies like tactical empathy, mirroring, active listening, and calibrated questioning.

These psychological tips and tools can be used throughout the conversations you have with your buyer to build trust, break down barriers and get your point of view across more persuasively.

2) Boost your BATNA

This is one of Chris Voss' favourite frameworks: the Best Alternative to a Negotiated Agreement.

Basically, how good is your back up plan if the deal breaks down and you have to walk away?

The stronger your BATNA, the more vulnerable the buyer – as they know you can more easily walk away.

As a seller, the best way to get a strong BATNA is when you have multiple keen buyers. If one of them delays, low-balls on price or pushes for unreasonable terms, you can just hop over to another buyer to get the deal done.

Read more on this in Creating Heat: Competitive tension in an exit.

You can also improve your BATNA if you have a healthy sustainable business and can continue to grow the business without having to make any deal at all.

Conversely if you BATNA is obviously weak, that gives the buyer authority to 'bully' you into accepting a lower offer or weak terms. Imagine if they know they are the only bidder interested, or that you might go bust if you don't sell the business in the next three months. That's not a great place to be...

The key in negotiations is making sure the buyer knows that you have a strong BATNA, and could happily walk away if the terms aren't right – without crossing the line to be threatening.

3) Three Big Things

You need to focus on a small number of critical areas when negotiating your sale.

These are areas which are non-negotiable – if the buyer will not meet you on those terms, you would rather walk away. That might be a minimum upfront payment, or terms on your involvement after the deal closes.

Why does this matter? Because if you focus on everything, you focus on nothing.

Having a short list of key areas will help you to stay stubborn where it matters most, so you end up agreeing a deal that ticks your most critical boxes.

Read more here on how to choose your key areas and how to share them with the buyer Three Big Things.

4) Understand your buyer and their motives

You should understand your buyer's strategy for making an acquisition, and why they want to buy your business specifically.

That usually falls into one of six strategies. That might be to expand into a new market or offer an adjacent product, or to fill a gap in their product suite.

Explore more on that in: The SIX strategies that drive M&A.

Understanding their motivations will help you to smartly pushing the benefits of the deal and calling out the risks if the deal were to break down. That can add nice leverage in negotiations.

You should also know everything you can about your buyer's business, their recent performance, wider strategic goals, and the key people. The more knowledge you have, the better.

5) Know your numbers

Negotiations will get technical, drilling down into specific numbers about your past performance, forecasts, the market or planned synergies. Especially the most important negotiations – on price.

Sellers that do the best in negotiations always know their numbers inside and out. You should know all the key of your financials and forecasts, and the KPIs of the business.

When your valuation comes under pressure, you'll be ready to defend it with logic and evidence and get the best price.

6) Get your mindset right

Many sellers see M&A as a fight between buyer and seller to see who can 'win' to get the best price and the best terms. The seller is the enemy, and you want them to lose and much as you want to win.

That's a harmful mindset.

Instead, you should see M&A as a team effort. You are actually on the same team as your buyer – working together, trying to get a deal done that works for both of you.

That means that you should be collaborative, transparent and helpful, building trust and helping them to get the deal over the line. Once you have that trust, when you do put your foot down hard on a point, they are more likely to listen.

This mindset yields far better results than treating M&A as a war.

Read more on this in: You are on same team as your buyer.

7) Control your emotions

The overriding emotion during an M&A deal is fear.

You're terrified (and maybe paranoid) that you will get screwed over, that the deal might suddenly die or that you will let your partners and team down.

With so much fear around, it's easy to get overly upset in negotiations. I've seen many sellers irrationally explode at their buyer over something that, in hindsight, was not a major issue. That can blow up the good faith that you've built with the buyer.

This often happens later on in the deal when fatigue kicks in.

There's no specific tips here, other than to bear this in mind and rely on your usual tools to manage your emotional energy – that might be time out of the office, exercising or whatever works for you.

8) Use your advisors wisely

As your deal progresses, you will end up surrounded by a small army of advisors. You'll have lawyers, maybe an M&A advisor, accountants and perhaps other specialists too.

Use them wisely.

They are experts in the art and science of getting deals done, and have seen many deals before you. They will know clever ways to overcome a deadlock, or ways to respond to an issue in due diligence.

Some sellers don't fully trust their advisors and try to keep them at arms length, which can be a mistake.

I hope these 8 tools are useful to help you get the best from the pivotal negotiations during your business sale.