Buying a business means paying with today's money for a future flow of income. The seller, meanwhile, is selling an embellished past. Negotiating a business as a going concern is therefore not about haggling over a figure, but about demonstrating that the asking price rests on unverifiable promises. The buyer who masters this gap walks away with a 15 to 30% discount; the one who ignores it pays for the seller's nostalgia. Here is the method.
Before price, value: what the negotiation is really about
A going concern is not premises: it is the customer base, the name, the leasehold rights, the equipment and sometimes the contracts. The seller values it as a multiple of earnings (often 3 to 5 times operating profit) or as a percentage of turnover. Your first task is not to negotiate that multiple but to challenge the base it is applied to: the adjusted profit, the recurring turnover, the dependence on the departing owner. Every documented weakness becomes a legitimate reason to lower the price, not a demand thrown across the table.
- Adjusting operating profit: add back the owner's true remuneration, personal costs booked as expenses, and one-off income that will not recur.
- Quality of turnover: revenue carried by three clients, or by the seller's own personality, is worth less than turnover that is diffuse and loyal.
- The lease: remaining term, rent, and any clause on changing the permitted use. A short lease, or one open to an upward review, cuts into the value.
Anchor on objective criteria, never on "what people do"
The seller will open with a round, comfortable figure. Do not react to that figure: counter it with a framework. The objective criteria technique turns a trial of strength into a discussion between experts. You are no longer confronting the seller, you are confronting their price with the norms of the sector: tax scales for business transfers, comparable transactions, industry ratios. When your counter-offer lands, it must lean on these benchmarks to set an anchor point that is credible and low, but reasoned, and that redefines the range.
The case of the overpriced hair salon
A buyer I was advising had his eye on a salon on the market for 140,000 euros, which was "a year's turnover, the going rate for the area", said the owner. The turnover was real, but a look at the last three sets of accounts told a different story: 40% of the customers followed the manager personally, and she was about to set up 15 km away.
We did not attack the price. We put a calibrated question: "How is a buyer supposed to keep a customer base that comes first and foremost for you?" Silence. Then, applying the tactical silence, my client said nothing and let the manager fill the void. She ended up acknowledging the risk and, of her own accord, raising the idea of a six-month handover arrangement.
We then reframed with tactical empathy: "You built this salon on your relationship with your clients, and that is precisely what has value, and what makes the takeover fragile." Acknowledging her achievement while naming the risk tipped the discussion. Final price: 101,000 euros, plus a paid three-month handover and an earn-out linked to customer retention. The seller felt respected; the buyer paid for the reality, not the story.
Your real power: the fallback option
What made this outcome possible was not a magic formula, but an alternative. My client had two other businesses under review. His BATNA, his best alternative, gave him the composure to say no. Without it, you accept anything. With it, you can deploy the walk-away: politely putting the discussion on hold. Nothing brings a price down like a solvent buyer putting his pen away. Facing a seller keen to retire, that simple step back rebalances everything.
Building the deal: conditional concessions and guarantees
A good price poorly secured is still a bad purchase. Negotiate the figure and the contract. Use give-and-take: every move by the seller calls for something in return, never a free concession that would cheapen the next one.
- Holding the price in escrow with the conveyancer during the period when creditors can raise objections.
- A warranty against undisclosed liabilities and a geographical non-compete clause on the seller, non-negotiable.
- Earn-out: link part of the price to the turnover genuinely holding up. A confident seller will accept it; one who refuses tells you something about how fragile the business is.
- A structured handover to transfer the customer base, especially in relationship-driven trades.
To choose the right technique for the moment, first offer, deadlock, lease, dip into the library, and rehearse holding your figure before the decisive meeting on the simulator. Negotiating a business is 80% preparation and 20% keeping your nerve on the day.
FAQ
On what basis do you bring down the price of a going concern?
On facts, not haggling. Adjust the operating profit, measure how dependent the turnover is on the seller and on a handful of clients, and examine the lease (term, rent, review). Every quantified weakness justifies a discount against objective criteria: the sector's transfer scales and comparable transactions. A price is never challenged "because it's expensive", but because the value base is weaker than advertised.
How do you negotiate if the seller refuses any reduction?
First, do not give in to the pressure: a seller who rushes you is often trying to hide a weakness. Strengthen your BATNA by keeping other businesses under review, then shift the negotiation from price to structure: earn-out, warranty against liabilities, handover. If the deadlock persists, deploy the walk-away. A credible buyer who steps back calmly nearly always reopens the discussion.
