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  • Writer's pictureEric Williams

Business broker as bad cop

In most business sale transactions in which Codiligent has provided representation the process does not involve a lot of negativity between the buyer and seller. For a business sale to consummate both the buyer and seller must perceive they are benefitting or winning from the transaction. Consequently, negotiation usually involves developing a respectful and empathetic understanding of both sides' objectives and concerns, and then figuring out how to come to agreement, make compromises, and find common ground - and if that's not possible then to respectfully and positively part ways. This is a far cry from the highly dramatized movies depicting a bunch of suits sitting around a boardroom table grandstanding and pounding fists.

However, one of the benefits of using a business broker is the ability, if necessary, for the broker to play good cop / bad cop (with the broker being the bad cop). If negotiations hit an impasse, the other side is pushing too hard, or is being unreasonable, then the business broker can become more aggressive in negotiations while the seller preserves the positive relationship necessary not only for getting the transaction closed but having a positive transition.

In one transaction I was involved with where I was representing the seller, the buyer was being very unreasonable on a few items being negotiated in the purchase agreement. I was able to insist on changes and appear to be driving those efforts. The buyer was very upset with me despite the fact that I believe his positions were irrational. Had the seller been the only person negotiating these terms, and had been as firm as I was, I believe it would have had the potential of jeopardizing the deal. Instead, we were able to get to a point of agreement, and the seller was able to patch up any hard feelings by saying to the buyer, “that darn broker of mine. I know he is looking out for my interests and I feel like I need to follow his advice, but I wish he didn't have to be so aggressive. While I need to follow his advice, there are a few other issues I can give a little on.” Without my bad cop involvement I believe my client wouldn’t have succeeded in finalizing the deal, or if he had it would have been with worse and more problematic terms.

In many transactions there's no need for a Bad Cop role, but when there is, Codiligent is not afraid to step up to the plate and have difficult conversations with the other side of a transaction and their advisors.

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