Negotiating the purchase: tactics to lower the price
Introduction
Buying a business represents a major investment. The price requested by the seller is not always aligned with market reality or the risks identified during your analysis. Negotiating the purchase price effectively can save you tens, even hundreds of thousands of francs.
But beware: an aggressive or poorly prepared negotiation can destroy trust and compromise the transaction. The seller often remains involved after the takeover, whether for the transition or as a business partner. Maintaining a constructive relationship is essential.
This guide presents proven negotiation tactics to lower the price without damaging the relationship. You will discover how to prepare your arguments, identify relevant negotiation levers, and use techniques that protect your interests whilst respecting those of the seller. Whether you are an entrepreneur in transition or an experienced investor, these strategies will help you conclude a balanced transaction and realistic deal.
📌 Summary (TL;DR)
Negotiating the purchase price of a business requires rigorous preparation and factual arguments based on identified risks, financial results or market comparisons. Effective tactics include staggered offers and negotiating on conditions rather than price alone. Avoid aggressive approaches that destroy trust. Call on an expert for complex transactions or when the valuation gap is significant.
📚 Table of contents
Preparing your negotiation before making an offer
A successful negotiation begins well before the first offer. Collect all available financial documents: balance sheets, profit and loss statements, client lists, current contracts. Analyse them in detail to identify potential weaknesses.
Look for ageing equipment that will require rapid replacement, fragile client contracts or those reaching expiry, dependencies on a single supplier. These elements constitute concrete negotiation arguments.
Define your ceiling price before starting discussions. Use the Leez valuation tool to estimate the real value of the business according to objective criteria. This preparation will help you avoid emotional decisions during negotiation.
Understanding the seller's position
The seller's motivations directly influence the negotiation margin. A seller retiring in six months will be more flexible than an entrepreneur simply exploring the market.
Identify urgency signals during initial exchanges: health reasons, family problems, need for rapid liquidity. This information is gathered naturally in conversation, without being intrusive.
Remain respectful in your approach. A seller under pressure remains emotionally attached to their business. The balance between commercial opportunity and human consideration often determines the success of the transaction.
Solid arguments to justify a price reduction
To negotiate the purchase price effectively, rely on verifiable facts, not impressions. The most convincing arguments are based on quantified data and identified risks.
Three categories of arguments work particularly well to justify a reduction: necessary short-term investments, weaknesses in financial results, and positioning relative to the market.
Identified risks and necessary investments
Document all investments you will need to make after acquisition. Obsolete equipment, premises requiring renovation, IT systems to modernise, regulatory compliance.
Quantify these costs precisely with quotes or professional estimates. If you must invest 80,000 CHF in new equipment, this amount justifies an equivalent reduction in the purchase price.
Present these elements as facts, not as criticism. The seller often knows these weaknesses but is not always aware of their impact on valuation.
Declining financial results or volatility
A downward trend in turnover or profitability constitutes a strong argument. Analyse the last three years to identify problematic patterns.
The recent loss of a major client, strong dependence on two or three contracts, or significant volatility in results increase the risk for the acquirer. These elements justify a discount.
Rely only on concrete data from financial documents. Impressions or assumptions weaken your position and may offend the seller.
Comparison with the market
Use standard valuation multiples for the sector to contextualise the asking price. If the seller requests 8x EBITDA whilst the sector average is 5x, you have a factual argument.
The businesses for sale on Leez offer concrete comparison points. Consult similar listings in your sector to establish a realistic price range.
Present these comparisons as market references, not as questioning the quality of the business. The objective is to align the price with economic reality.
Effective negotiation tactics (without damaging the relationship)
Negotiation does not stop at price. Your relationship with the seller determines the quality of the transition and your future success. Adopt tactics that preserve this relationship.
Two approaches work particularly well: structuring your offer in several stages to maintain room for manoeuvre, and negotiating on transaction conditions rather than solely on price.
The staggered offer
Start with an offer below your maximum price, leaving a margin to negotiate. This margin must be significant (10-15%) but not insulting.
A first offer that is too low risks offending the seller and blocking discussions. Find the balance between commercial ambition and respect for the work accomplished.
Reveal your flexibility progressively, in exchange for concessions from the seller. Each movement on your part must correspond to progress in the negotiation, not simply a free increase.
Negotiating on conditions rather than price
Reducing risk without lowering the displayed price preserves the seller's ego whilst protecting your interests. Several options exist: staggered payment over 2-3 years, earn-out clause linked to future performance, extended support period.
You can also negotiate selective asset acquisition, excluding certain obsolete equipment or dormant stock. This approach reduces your initial investment without modifying the nominal price.
These structural adjustments often facilitate agreement when positions seem blocked on the amount. The seller obtains their price, you obtain conditions that reduce your exposure.
What not to do during negotiation
Certain mistakes cause even the best-prepared transactions to fail. Avoid bluffing without solid arguments: the seller knows their business better than you and will immediately detect approximations.
Never criticise the business personally. Distinguish objective facts ("the equipment is 15 years old") from judgements ("you have managed maintenance poorly"). The seller has often devoted decades to their business.
Do not drag out discussions without valid reason, and avoid multiplying incoherent counter-offers. This approach erodes trust and suggests you do not know what you want.
Threats to walk away only work if you are genuinely prepared to give up. A failed bluff destroys all future credibility in the negotiation.
When to call on an expert to negotiate
Certain situations require professional intervention. For complex transactions or high amounts (beyond 500,000 CHF), an M&A adviser brings valuable expertise on structuring and negotiation.
If you identify a major disagreement on valuation, an independent expert can arbitrate using recognised methods. Complex legal aspects (commercial leases, employment contracts, intellectual property) justify the intervention of a specialised lawyer.
The Leez partner network brings together fiduciaries, lawyers and M&A advisers who support acquirers. These experts intervene according to your needs, without obligation.
Also consult the article Negotiating the sale price: techniques and acceptable limits to understand the seller's perspective. This reverse view improves your negotiation strategy.
Negotiating the price of a business takeover relies on rigorous preparation and factual arguments. Identify real risks, document necessary investments, and rely on objective market comparisons. Effective tactics prioritise the long-term relationship: propose staggered offers, negotiate payment conditions or guarantees rather than focusing solely on price. Avoid aggressive behaviour or unfounded arguments that compromise trust.
Understanding the seller's position remains essential. Their personal motivations and schedule often influence their flexibility more than figures alone. In complex situations, calling on an M&A expert can strengthen your negotiating position whilst preserving the relationship.
Are you looking for a business to take over? Browse the opportunities available on Leez and access verified information to prepare your negotiations. If you need support, our network of experts is here to advise you.
