Pre-Negotiation Planning for Business Acquisitions

Business acquisitions occur when one company attempts to purchase or merge with another. While this is a common practice in the business environment, companies often go through copious amounts of negotiation prior to the acquisition. Many companies make plans prior to the negotiation process.

Facts

Pre-negotiation planning helps a company's management define the goals of the acquisition process. Goals may include the dollar limits to be paid for the acquisition, the length of time to be spent in the process and decision about which managers will be responsible for the new company or operations.

Considerations

The purpose of planning is to help create an idea of the end result of a business scenario. Business owners and managers should consult accountants and attorneys to determine the impact of a business acquisition on the company's current tax or legal liability.

Significance

Planning prior to negotiating a deal is about preparing for and creating expectations. Companies should attempt to gain as much concessions from the other party. The pre-negotiating process can help companies gather information about the other party and create leverage during the acquisition process.

References

• Entrepreneur: Acquisition
• Yahoo Small Business: 10 Techniques for Better Negotiation