Negotiations: When Do You Walk Away?

One of the things that I have noticed over the years is that sometimes the best people with the best ideas are absolutely terrified that they are wrong and that their business idea will be a flop.  This can be dangerous for a variety of reasons, but from an entrepreneurial perspective it often leads to them getting less than the value of their idea when entering negotiations to sell their product or business (although to be fair, I do run into the people that wildly overvalue their idea to the point where it is impossible to negotiate, but that is a whole other problem).

The first piece of advice that I give people who are feeling that they aren't getting fair value in negotiations is to stop and consider how much of their personal stake in the business is driving their thinking.  If it is the sweat and tears that you have put into something that is motivating you, understand that it is possible that a potential buyer won't see or understand that investment.  They may only be seeing profits and potential, and may not understand where you are coming from.  Think about this, and decide if the offer is fair.  If it still isn't, be prepared to walk.

The second piece of advice that I give people is to listen to their intuition.  If something feels wrong, it could be that it actually is.  If you find yourself lying in bed at night and thinking about the numbers, or find yourself getting angry and irritable about the offer when you aren't in the negotiation process, ask yourself if the offer is actually unfair.  Think about the profits and the product, and if it doesn't make sense, then perhaps it is time to walk away.  If the numbers are close, it may just be the stress, so really check your emotional state.

My last piece of advice is to consult a lawyer.  I do not care how small the deal is, it is worth the investment.  If the lawyer warns you or tells you that the deal isn't in your best interest, heed the advice and be prepared to walk away.

It is okay to walk away from a deal, and if the business or product is truly a good one, you can be assured that someone out there will be interested.  Don't take the first nibble as a sign that there is only one fish - if you want to land the whopper, you have to be prepared to cast more than once.