Know what the seller wants out of the deal. That seems obvious, but sometimes what they want is not obvious even to themselves. You must dig deeper and read between the lines to uncover their unrecognized motivations. Make sure you dig deeper than what an owner says upfront to really understand what they want. It will save you a ton of time in the long run.
Really get to know the seller. Learning about his family, community, financial situation, interests, and more was invaluable, but the most important piece of information that you have to know up front is how he likes to negotiate. If you are not aware of this, it could cause delays, increased costs, and distrust. Ultimately, I should have asked him directly how he liked to negotiate and put a process in place to support his tendencies.
Legal vs. business conversations. As you build the relationship, see if you can set the parameters on when you will bring in the lawyers to a discussion and, more importantly, when you will not. When talking to the owner directly, you could be able to negotiate a number of variables together. For example, if the owner asked for a larger royalty, you could counter it by offering a shorter term. But when lawyers were brought in to discuss numbers and business terms, it can become more complicated and expensive.
Agree to talk at least once a week (no matter if you have something to discuss or not). By creating a consistent forum to discuss any timely concerns or issues, you create a relationship based on openness and trust and avoid miscommunication and wrong assumptions that can fester. A wrong assumption could kill the deal. So, set up that recurring weekly meeting now.
Sometimes, the owner doesn’t even know. You would assume the owner would know all the details, legal and otherwise, about their business, but this may not be true.
The internet is your friend during due diligence. Make sure you use the web and any other connection available to you to confirm the information you receive during your due diligence.
Look in the mirror
Know your BATNA (your best alternative to a negotiated agreement) upfront.
Don’t get ahead of yourself. Obviously, you need to do your due diligence, but don’t start spending time or money preparing to take over a business before the deal closes, or you can get too emotionally invested and make bad decisions if the negotiations start to falter.
Finally, talk with or hire an expert. There are business consultants and brokers who help guide a business buyer through the ups and downs and complexities of a business acquisition negotiation. Sometimes, they will give you very insightful ways on how to structure the deal and what due diligence you should do, and sometimes they can be similar to a financial advisor and keep you from making emotional or irrational decisions. Each deal is unique, so you will need to decide if hiring a broker or consultant is right for you and your deal.