Negotiating the Purchase Price of a Business

If you're planning to buy a business, you need to be ready to negotiate the purchase price, in conjunction with your attorney or financial advisor. The seller will want to get a price close to his or

As the buyer, you'll want a good price with terms that have the seller cleaning up loose ends. While the details of the transaction, including liabilities, warranties, and other responsibilities, are all part of the negotiation process, the price is always the main consideration.

To negotiate a fair purchase price, both sides must determine what the business is worth now and in the future. To begin calculating a valuation, consider the tangible goods and the assets of the business, minus the debt. The more difficult assessment will be in areas such as goodwill, customer loyalty, and other intangibles. It is here that both sides need to substantiate their valuations before negotiatiating.