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Oct 21
2016

When Buyers and Sellers are in Conflict

Posted by: Steve Marr

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I’m working with a person who is seriously considering buying an income tax preparation business. The seller is taking a job out of town. While they may be able to place a manager in charge of the business, the business would be better served if sold before next year’s tax season.  Given that we’re at the start of October, time is short to finalize a transaction, do a simple financial review, and close so the new owner has time to organize for the 2017 tax year.

 

Since I’m working with the buyer, I’m interested in helping get the lowest possible price for the business. Today, the seller became visibly irritated and insinuated that the buyer was trying to “steal” the business.  I interjected in an effort to keep the emotions in check.  I said, “No, we’re actually both on the same team. You have a business you’d like to sell in the next month or two, and my client is interested in purchasing the business under the right circumstance. If we’re able to come to an agreement, both parties get what they want.  Instead of opposing each other, we’re looking to see how we can make this work. If you believe the price is too low and have other prospective buyers, we understand that you’ll pursue those options. However, in the meantime let’s consider that we’re both on the same team trying to finish this transaction as soon as possible.”

We did not come to an agreement that day and may or may not in the future.  My concern for the seller is if that if they wait too long, they will be sliding into December. That would place my client with little or no time to gear up for the January tax rush. At that point the business becomes less valuable to my client.  My instinct says this transaction should get done but may not, mostly because the seller is treating the negotiations as a battle rather than a peace table proposition.

The role of the businessperson is to find a need and meet that need. The customer receives the product or service and the business person receives money.  Unless both agree, there is no transaction. The businessperson makes no money and the potential customer walks away empty.

When I was in international trade, our company did some work with Ford Motor Company and General Motors.  GM brought in Jose Lopez to lead the purchasing group.  Mr. Lopez told the staff that GM would declare war on suppliers in an effort to drive price down at every opportunity.  While we always tried to be price competitive, this made a partnership difficult. Any innovation or changes that we suggested would be provided to our competitors to help them drive price down. At times we were reluctant to share information because of this. Ultimately GM filed bankruptcy.

Ford took a different approach. They tried to work together to improve quality and price. They told suppliers that we wanted partnerships, not warfare.  In working with Ford we suggested and they implemented a number of cost-saving changes. They did not immediately pass them on to our competition so that both companies would do better. Ford Motor Company never declared bankruptcy. I’m not suggesting that the supplier relationship was the only factor in the demise of General Motors; however, it was indicative of an attitude.

King Solomon wrote, “It is to one's honor to avoid strife, but every fool is quick to quarrel.” (Proverbs 20:3, NIV) When buyers and sellers negotiate, each will do better when they embrace the concept of team player relationship rather than act as opponents.

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