How to Negotiate a Business Buyout

Negotiating a business buyout can be a tough negotiation to go through. Usually this involves an owner either selling a business because it is no longer profitable, or because they are no longer interested in operating the business. In either of these situations, the owner will want to try to get as much as he can for the business, even if it means taking a loss when compared with the amount of money he invested originally.

Instructions

1. Calculate how much money was invested in the business when it was first purchased. This will include the purchase price along with any fees that were paid to lawyers, accountants or government agencies.

2. Determine the profits or losses that you have incurred as the business owner during the time that the business was in operation.

3. Combine the costs for the business, any money paid for the real estate associated with the business and any losses incurred while operating the businesses. The owner of the business should try to recover as much of these expenses as possible when agreeing to a buyout price for the business.

4. Locate someone who is interested in buying the business. Advertise either in local newspapers, trade magazines or through other media outlets such as radio or on the Internet.

5. Treat the business as a business. As a business owner it is common to have emotional attachments to a small business. When negotiating a buyout price, remember that the price should be determined by the financials of the business and should not based on emotion.

6. Be honest with yourself. If the business has not been profitable for several years, do not expect to get the same market value you might have paid for it when you first purchased the business. The buyer is an investor and will have done their own research as well.

7. Negotiate with multiple parties, if possible. Play them against each other to get the best deal for yourself, but don't wait too long to accept an offer. Waiting too long will give the interested parties an opportunity to reconsider their investment and pull out of the deal.

8. Use an attorney to finalize the financials of the transaction. Do not agree to "under the table deals" and risk being taken advantage of--this can ultimately cost more than hiring an attorney.

Tips & Warnings

• Treat the business as a business, treating it with an emotional attachment might end up resulting in an owner asking too much for it and chasing away all interested buyers.

• Never use the same attorney as the buyer. The buyer and seller should have different representation to ensure a fair transaction in the business buyout.