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Indifference as a Style of Negotiation

They have called several times over the past 18 months. Their offer is getting closer to what I want for the company.” Tom (not his real name) called me on the recommendation of his sister who I knew from church. He owns a medical services company that he started in 2005. The company has been profitable from its second year of operation, but the past three years the company has been growing at double-digit rates.

Tom knows his exit objective. When we met to discuss his negotiating strategy, he said, “I don’t want to sell until I can clear $11 million, that’s the number that allows me to do what I want to do the second half of my life.” He had prepared a detailed Excel spreadsheet to explain why his valuation was reasonable, and he had even done an analysis to determine how his company would fit with the buying company. He also knew the buying company was valued on a higher multiple than they were offering for his company, making his company even more valuable since it would immediately be “accretive” to the buying company.

Tom wanted me to affirm what he was doing before he sent the valuation analysis on to the company that was making a run at him. He was, shall we say, excited to prove that his valuation expectation was reasonable.

But I told Tom his analysis would not only not be helpful, it might actually hinder his ability to get the valuation he wanted. Trying too hard to prove his numbers, Tom was telegraphing his interest in selling. When a buyer senses the business owner is interested in selling, the dynamics of the negotiation are immediately controlled by the buyer. So I told Tom, it stands to reason, the best way to get his price is to act indifferent. I told him to not try so hard, but to just tell them the valuation he wants, not a dime less, then wait. I told him he should say no, then say no, then say no again. I said, “Tom, you have your expectation, stick with it and let the buyer come to you.”

Now admittedly, this “don’t negotiate” negotiation strategy works only when the owner, like Tom, knows exactly what his/her bottom line is and can afford (financially and emotionally) to see the deal die. And it usually only works when the business owner receives an unsolicited offer from a company that has a strategic interest in making the acquisition.

I advised Tom to put his spreadsheets away and not worry about justifying his price. He knows this buyer needs and wants his business. He will get his price, probably sooner than later, if he is firm and indifferent.


JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."

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