Do Business Well

Closing the liquidation deal

It is a standard ploy for a vendor to suggest that he has other people about to make an offer. This may well be true, but try probing a little further. Ask when the vendor expects to receive their offer. Have they cash in the bank, or does he think they will have to borrow? Are they people already in the same trade or is this their first venture?

These questions may appear rather direct in cold print but you can make them less so in conversation. If there is substance to the vendor’s claim, the answers will probably make this apparent; if he has invented the other people or is merely indulging in wishful thinking, this should also become apparent. It is legitimate for you to ask what time limit there may be during which he expects to have to make a decision. Never allow yourself to be pushed into making an offer there and then on the grounds that he expects to hear from the others tomorrow. If a vendor is serious about the possibility of your buying the business, he will give you a day or two to come up with a better figure. If he tries to rush you and you call his bluff, you have at once put yourself in a stronger position. You can then take your time and reduce your offer accordingly.

All of this may sound a little complicated but it really comes down to common sense and taking your time, rather than rushing in where angels fear to tread.

Remember that there is no one ‘right’ price for any business. A good agent will know roughly what he expects it to fetch, based on the prices of similar businesses sold recently, but a determined buyer or a determined seller may well swing the price of a particular deal by a substantial margin. In other words, it all depends on who wants to do a deal the most – the buyer or the seller.

When you first start looking seriously at businesses and you think that you have found the right one, the temptation is to assume this is the only business for you. In fact, this is almost never the case and there is always another just around the corner. So do try to avoid too much emotional involvement in any particular deal. If you can decide on the right price and then be fairly cold-blooded about negotiating that figure, you stand a much better chance of achieving it. If you go into negotiations with the feeling that you must have this business, you are almost certainly going to have to pay more for it. That is the marketplace at work! This is where taking a second or a third look at the premises helps so much. The scales drop away from your eyes and you find it much easier to see it for what it really is a reasonable proposition in most cases, provided that you can buy it at the right price.

Of course, there are exceptional opportunities which occasionally crop up. Perhaps you have known the business for some time and already done a great deal of homework and are therefore sure of your choice. This is fine, but remember the three stages of negotiation – compress them as much as you dare. Remember, too, that there are many businesses which look better than they really are, and few whose attractions need seeking out.

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