Rules of Negotiation: Coming Out

When we are looking to sell an asset, of course we want to make the best possible return.

And hopefully, after achieving the first principle of negotiation—we made money going in. That is, we bought this asset on very favourable terms.

But if we paid too much, we will now be under pressure to at least hold our ground. 

Let’s hope that that is not the case…In any event, we wish to make this post a winner, whereby we are well prepared for the other end of ownership: we want to make money on the way out.

We need to clear our thinking of the history of the asset and respond to the market conditions that prevail in the present. Forget the past, cease to be anxious about the future. Let’s live in the Here and Now.

To sell successfully, it may take a lot of preparation to position ourselves. It will certainly take a lot of impulse control at crucial times—no greed, no vanity, certainly no arrogance. From there, there will be no turning back. 

Keeping all of that in mind, let’s consider the rules of negotiation as we are on the seller’s side:

1. State your purpose. Why is this sale so important to you? Talk it over with whoever else is involved on your side—what are the benefits, what are the risks; quantify the net gain to be had. Recognise the emotional aspects of the purchase.
2. Set your sales criteria. What else besides price? Write down your required features of the sale, then separate them into “mandatory” and “optional”. Without each of the mandatory features, there will be no sale. For the optional you will be weighting importance against performance.
3. Research (each) buyer’s position. Find out how long the prospect has been looking and what offers he/she may have made; what is their access to funds, their financial history and reputation; what pressures are on them to buy; why hasn’t the prospect bought yet?
4. Set your highest price. Be reasonable: compared to alternatives decide where this price sits; decide what you are realistically able to charge. Would a prospect see this as good value? Revisit your purpose—does this price meet fully meet your aspirations? If not, reset.
5. Set your financial parameters. What are your terms and conditions? Is this cash on delivery, or is there a settlement period? If so, for how long? Will you be offering any variation to your usual terms and conditions? Be firm, but also be patient.
6. Set your lowest price. Determine your least optimistic outcome, based on your research and your desired return. Your lower limit (not revealed to the buyer, of course) may not be needed, but you need to be flexible with the buyer without trashing your asset.
7. Don’t negotiate. Having done all this homework, you are in a strong position. Rather than approach the buyer tentatively, perhaps standing in line with other prospective sellers, make your offer—once only. Be clear that you will not countenance the counter. [Use this sparingly.]
8. Proceed calmly (even beyond the point of commitment). Your prospective buyer may be expecting aggression or intransigence but may be pleasantly surprised, even disarmed, by a calm and friendly approach. Aggression, disdain or contempt may be used under special circumstances—advisedly, if at all.
9. Walk away. For this, you will need the desperation, the urgency of the buyer. You will also need to keep on walking if they don’t cave; otherwise you will look like an idiot. You may say “You may not want to hear this, but...”
10. Make your final offer. If you are still in, lead with your appreciation of the asset. State the reasons for your confidence in the starting price. Use as much silence as you can bear—let the buyer rush. If they counter, reply with half.

Assuming that you settle on a price within your range, you have sold successfully. Secure the sale, making sure that there are no conditions that will disadvantage you.

Just as with buying, selling can be very emotional. You must exercise impulse control.

Plus research, calm manner, rigorous process.

Next week: What Sort of Decision is That?

About the Author

Jeff Bell is Principal of executive consultancy ResultsWise in Perth, Western Australia. 

To boost your leadership, ask Jeff about consulting, coaching, strategic facilitation or his leadership course and his Band of Leaders group [email protected]

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