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Why Deals Fall Apart and How to Build Trust in Negotiations

Posted by on in Global Business Group Blog
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Negotiations over the sale of a business will often start positively, before ending in disappointment for both sides. An honest, open approach at the outset will help to create the right environment for a deal to be completed successfully.

Maintaining trust

One of the most significant factors that most failed negotiations have in common is a breakdown in trust. If you're looking to sell your business, then it's critical that you should offer an objective appraisal of the current situation.

That's not always something that comes naturally to a vendor. There may be a temptation to quote positive figures, in order to establish a higher selling price. The problem is that the due diligence process will always mean that the truth will be revealed in the end. If a prospective buyer believes that you are attempting to hide some important facts, or that you are not willing to be honest, they may well walk away from the deal.

What this means is that it's absolutely critical that you should offer detailed information too. By not providing some information, you may create the impression that you are being dishonest. That may not actually be the case, but impressions are incredibly important in such situations.

Most prospective buyers will be interested in knowing about the challenges that you face too. They'll want to understand the risks that are associated with the potential investment and will feel more comfortable knowing that they have a complete understanding of the business.

With that in mind, you should be prepared to talk openly about areas of the business that aren't going too well. By offering that information freely, you help to build the required level of trust.

Try to be consistent

Another reason why many deals collapse is because the vendor or buyer attempts to re-negotiate, once positions have already been agreed. If you have a particular price in mind, then make that clear at an early stage. By looking to re-negotiate at a later stage, you will undoubtedly put the entire deal in jeopardy.

The more changes that you attempt to make to an initial agreement, the more chance there is of the whole deal falling apart. Think carefully about your aims and objectives at the very outset of the process. That way, you won’t present a negotiating stance that appears to be inconsistent.

Conclude deals quickly

When negotiations drag on for a period of time, it becomes more and more likely that a deal will eventually collapse. That doesn't mean that you should rush into decisions, since you'll clearly want to be sure that the deal is right for you.

What this does mean, however, is that you should certainly look to respond to requests quickly and accurately. By doing so, you make it clear that you are serious about the transaction and that you are committed to completing the deal.

If you take your time and appear to be hesitant, then it's natural that the other party will start to question your motivation. They may wonder whether you are really prepared to complete the transaction. This can lead to a loss of trust and has the potential to cause the other party to look to complete the deal elsewhere.

Be respectful

You are looking to get the very best deal, but that doesn't mean that you need to see the transaction as being personal. By maintaining a professional stance throughout, you'll find that others react more positively to your requests and ideas.

If you allow yourself to create a hostile situation, then you simply increase the chances of the deal falling through.



This article was contributed by, the market-leading directory of business opportunities from Dynamis, the online media group also behind and

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Guest Monday, 18 December 2017