Professional sellers of various products and services use a number of passive and active hard sell tactics to persuade buyers to part with their money, and even put up the price after the fact:
- “That offer is only available until close of business today”
- “This is the last one we have in stock, and we don’t know when the next orders arrive”
- “Calling Mr Otis”*
- “We have three other buyers”
- “While stocks last”
- And many more
So a few weeks ago I wrote here about the high prices for which tech companies tend to be sold. A précis: Twitch is a company which provides live views of gamers’ screens to people that are interested in such things. Google was a talking a $1B deal. I asked about the price of a company that was making no money, and provided some suggestions as to why it would be sold so high.
Suddenly, enter stage left: Amazon, paying $970M cash for the business. It appears that Google may have walked away to avoid anti trust investigations. Perhaps Google was only prepared to pay with their own sky high stock in overcooked shareprice markets.
Whichever way, Amazon blinked because it really needs more revenue (and is ditching Google adverts from its own site in favour of Amazon’s own brand of click through advertising.)
In the new paradigm which Google, Apple, Microsoft and Amazon have created, there will be many more similar deals in the future, as they all seek to either position themselves in line or ahead of the others, or try to take potential competitors out of the mix.
With respect Dear Reader, I suggest that your business is probably not worth this sort of money. But the underlying principles are similar when it comes to selling it one day:
- You need to have options
- You need to create competition between prospective buyers
- You need to know what the realistic value of your business is
- You need to understand your buyers’ motivation
- You need to be able to negotiate without blinking (or twitching)
Understand the thinking of the business buyers, and your eventual buyer may start the process on the backfoot, without even knowing it. Preparing your business well in advance for the eventual deal will nail the deal down.
* “Mr Otis” was a technique used by motor car salesmen in the USA. A now relaxed buyer would settle back in his chair after signing the papers to trade in his old car. He would mention that the next best trade in offer was substantially lower (by $2,000, say). The salesman would wait a minute or so, shuffle the papers, look for his stapler, then say: “We just need to get this signed off by Mr Otis”. He would call his manager on the phone, and say: “Mr Otis, won’t you please come down and meet Mr Buyer?” Being called “Mr Otis” was the manager’s cue for objecting to the offer on the trade in. Of course by that time the buyer was so emotionally invested in the deal, that he could never back out, and he would quickly agree to the lower trade in value. – Lesson 25 in Harvey Mackay’s Swim With The Sharks Without Being Eaten Alive.