By Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation
Perhaps too much has been written about elaborate or indirect negotiating techniques in business situations. At least in the case of acquisitions, we espouse a direct, problem-solving oriented approach. This builds trust between buyer and seller and allows for resolution of key issues.
Thorough understanding of the seller’s motives and details about his or her company and industry will aid your negotiating ability. You should thoroughly understand the prospective company, including the likely risks and potential problems you might encounter if you take over ownership. Further, you should be able to present such concerns in a way that the seller will find believable and will be able to accept.
By Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and Managing Director of www.GavdosPress.com and Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation
This is the 4th of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week
Credibility is a very important aspect of success in purchasing a company. Many of the issues important to establishment of credibility for one constituency may also apply to some of the other groups. Looked at altogether, the following issues are likely to help you to establish trustworthiness and believability in your proposed venture with the business community and the community at large:
- That you are serious enough about making the deal that you are devoting significant resources and effort to this venture. If you are a first time buyer, full-time dedication to this venture will contribute positively to your image.
- That you have reasonable qualifications for running the business, such as an M.B.A., appropriate work experience in a related industry and/or directly transferable management experience.
- That you are clear about your vision for the company and can communicate why you will be more successful than the present owner in the case of an underperforming firm, or at least as successful as the present owner in a well performing firm.
- That when approaching the bank for a loan, you have the necessary amount of equity to support the loan.
- That you have equity partners who are considered credible themselves, either as savvy, experienced business people and/or as investors in previously successful deals.
Dr. John Psarouthakis,
Executive Editor, The Business Thinker.
There is no sure way of predicting when opportunity may present itself. Even if you are alert and look for it, there is no predicting when it might come. I know, because an opportunity that changed my professional life came at a time and in a way I least expected it. It was only years later that I fully appreciated the lessons I learned, lessons that I have since used countless times.
I was still a student at MIT, in my senior year. I was fortunate to get a job at a nearby utility company and once I completed my degree, I continued working there. In many ways the utility was a nice environment to be in. Some might say it was ideal. Comfortable, stable, dependable, secure. In other words, for me the utility company was a dangerous place.