The art of negotiation plays an important role in buying or selling a business. Differences of opinion are inherent in the negotiation process and only realistic negotiators can find creative solutions to such differences. Businesses change hands most easily when the parties assume a non-adversarial posture. It is imperative that the parties know the issues that are important to one another. Each should understand the other's position on these issues.
Price is just one aspect of the transaction to be negotiated.
Terms are just as important, particularly the period of time over which the debt is to be repaid and the allocation for tax purposes of the purchase price. Sellers naturally have the upper hand in negotiations since they best know the business. A seller should make full use of that advantage. A buyer should minimize the seller's advantage by learning as much as possible about the business. It is important to do more than study the business to prepare for negotiations.