In this negotiation if you were the buyer, you might be troubled by the fact that you were given such a low number, $470,000. A constraint that under no circumstances are you allowed to pay more than that. Your authority has been limited. Why is it that your boss might have done that? Well, perhaps the person is a jerk. But more realistically, perhaps what the firm wants is to make a really high return. And they think they have lots of opportunities to get 10X returns, and it's not worth their while to do a small deal like this if it isn't gonna be exceptionally profitable. Perhaps is the case, that that's all the cash they have, and therefore, they don't want you spending more than that. Perhaps the case, they just want you to soften up the seller, and see if the person is willing to do the deal at a low price and if not, they can always come back in at a more reasonable number. For whatever reason it is, you should look and act as if that number really is your limit. And a lot of times in negotiation you'd like to be be able to say, I can't pay more than this. And here your boss is helping you by stiffening up your backbone and giving you this hard limit. Which is true, cuz when you say, I can't pay more than this, you really can't. Now of course, the seller in that context is gonna try and find all sorts of ways to go around you. Because, well, you can't pay more than 470, let me talk to somebody who can. And the response to that is this is my job. We need to continue this negotiation and see how far we can go. And so, therefore, I can't give you access to this other person, until I feel that, there is no deal for us to be done. Or that there's something that I should be taking to the person, but you can't just go around me. You have to work with me at the start. In this particular case, because the company is so valuable, I don't think you'll make great progress by going to the seller and trying to argue why the company's only worth 200,000. Right, coming with a low bid offer is probably gonna be counter-productive here. Because the person's gonna say, here's why it's worth 3 million, why are you offering me 200,000? And if you come back and say, no, here's why it's worth 1 million rather than 3 million. At the end of the day, even if you win that argument, then you say, but I'm only going to give you 400,000. It's not gonna be a particularly persuasive argument either. And so, instead, I think you might try and turn weakness into strength and say, look, your company, it could be worth 2 million, it could be worth 3 million. I'm not gonna argue with you over that, in fact, good luck. If I were you, and I could find somebody who will pay 2 or 3 million for the business, I'd sell it to them, go right ahead. And in fact, I'll write you a congratulatory note. But if it turns out that we are the best buyer and frankly I think we are, we can create tremendous synergies by working with you. And ours is the best bid then I hope you'll come and sell your business to us. And so, instead of arguing with a person about whether or not their company is worth 3 million or 2 million or 200,000 instead say, this is what I can do. Work with me and help me to find a way to make this deal possible, at the price that I can pay. And so in particular, I may not be able to pay you as much cash as you like, but what are some of the other things that I can do to help make your life good? What are some of the things that you are worried about in this deal? What are some of the things that excite you about this deal? How can I help relieve you of the worries and increase the level of excitement? And I know, that of course, more cash is always good but what are some of the things besides cash, that will make this deal better for you? And I think the time to do that, is not after you've butted heads for a while, and realized there's no deal to be done just on the dollar amounts. Instead, I think the time to do that is right up front is to say, look, at some point we are gonna be talking about dollars. I know that, and that's gonna be confrontational, because you're always gonna want me to pay more, and I am always gonna want to pay less. But before we get there, let's talk about what excites you, what motivates you, and how I can help make this deal work better for you. And that to me is the way of beginning the negotiation. A lot of people look for opportunities to expand the pie as a last resort, when there's no other way of making the deal work. Here, what I'm proposing is you do it as a first resort, as a way of getting people invested in the negotiation and also helping appreciate how big a pie can be created.
