First Kiss Negotiations
AKA: How not to ruin your chances of attending the prom.
Negotiations have often times been described as an art, and having years of first-hand experience in negotiations of all types of conflicting scenarios, including trade union negotiations, I can honestly say the manner in which people enter negotiations is much like the impact of the first kiss on the first date. Being a bad kisser can easily lead to busy signals at the next opportunity, much the same as delivering inaccurate or misleading messages when beginning negotiation discussions.
In purchasing a veterinary practice, I always ask the Vendor to confirm in writing what is it they are selling, (operating assets or the ownership share certificates), for what price and under terms and conditions. The manner and detail provided to this request tells me the degree to which they are committed to selling at a reasonable price and under reasonable terms and conditions. If the Vendor cannot provide this information readily, they are generally not prepared and as such will look towards changing their demands after the negotiating discussions have begun.
The second biggest problem to entering into purchase negotiations is a general failure to understand the relationship between the Vendor and the price. Not knowing or understanding this relationship could mean making an offer that is significantly below the Vendor’s desired price and therefore cause a potential insult. This type of dangerous negotiations is like telling the girl she is a hooker and then asking her to be your date for the prom! Extremely difficult to recover from this type of negotiation error as the impact normally carries over to subsequent negotiation discussions unless the parties take the time to clean up the mess, which can be difficult for those who have experienced a night on the couch at home.
If the Vendor has provided a clear indication of what they are selling, for what price and the general terms and your value calculations are significantly different, it is time to have a meeting and understand how the Vendor came to the selling price. Don’t negotiate but rather learn the relationship between the owner and the price. Is there a commitment to sell, is there real motivation to sell or are the demands unreasonable? Openly share your concerns outside that of price consideration and see if there is motivation to mutually solve. In representing Vendors, when the Purchaser opens negotiations aggressively without respect for the Vendor and price relationship, I back away and look for a mutual subject discussion to see if there is harmony elsewhere. If not, I back away completely.
In representing Purchasers, I tend to spend some time talking to the Vendor to gain an appreciation for their relationship with the practice, their concerns about the sale and obviously how they determined the price. My objective is to determine selling motivation and the Vendor's understanding of the transaction process. Most importantly my objective is to simply open the lines of communication and begin to develop trust and confidence with the Vendor. There is always lots of time to negotiate!
As a general rule I do not pursue negotiations when I am not convinced the Vendor is motivated to sell and is not prepared to enter into meaningful discussions. Transaction circumstances lacking motivation and preparation lead to changing goal posts and frustration arising from wasting time and money. If it is appropriate, I will propose and discuss an offer, but only when I think the Vendor is keen to look at another perspective.
Negotiating is a discussion involving conflict and unless you believe both parties will agree outright as to “the price” then, this should be the last topic to be discussed. Focus on the smaller issues, reaching an agreement that then serves as the catalyst for negotiating the more difficult topics.