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Home > Tools and Resources > Ask the Expert > Should Buyer "Stall" to Negotiate Better Terms?

Should Buyer "Stall" to Negotiate Better Terms?

By Richard Parker | Diomo Corporation
Contact Richard Parker | Visit Website | About The Author

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Question:
I'm thinking about buying a 20 year old wholesale/distribution business. They have many longtime clients. I have some experience with this type of business. The current owner will be retiring to Europe from Florida. He is scheduled to leave in three months. I know that if I wait for 60 days or so to finalize the deal, I'll be able to negotiate better terms. How can I lock up the seller now so nobody comes in and scoops the business from me?

Answer:
The key question here may be why would you want to wait for 60 days? Good businesses sell quickly and if this is a solid business, chances are it will be gone in far less time to another buyer. Besides, the seller is probably highly motivated right now given that he wants to leave in 90 days.

The other thing to consider is whether you may be shooting yourself in the foot by waiting too long. Given the time it takes to close a deal and I'm certain you'll want to have a proper transition and training period, you can do more harm than good by waiting.

Sure you can be a bit "sneaky" and negotiate a deal now and then try to revise it but that is never a tact that I would recommend. Besides, with many long-term clients, you will want the owner to stay for a smooth transition period so that all of the accounts and employees are comfortable with you as the new owner.

In getting back to your original questions, my recommendation to "lock up" the seller is to aggressively negotiate the deal now, get a duly executed agreement in place, conduct your due diligence, and if there are any major issues, you can revisit them. Do a thorough job investigating and researching the business, allow for an adequate transitional period, and close the deal.

Get more expert advice in Richard Parker's How To Buy A Good Business At A Great Price - the most widely used reference resource and strategy guide for buying a business.

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About The Author
Richard Parker is the author of: How To Buy A Good Business At A Great Price, the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center.

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