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Business For Sale Litigation Property Law

How to Negotiate Anything-4 Stunningly Effective Tactics

negotiation tactics

Negotiating.

Haggling.

Some people, like my mother, love negotiating, and have done so all their life.

Some people, like my wife, hate haggling. I think people like this feel it is insulting to the other party. But often, the other party expects you to haggle or negotiate, and are ready for it. In fact, they have probably built the negotiation into their price to begin with.

Being able to negotiate effectively is a vital skill, one which can serve you in all walks of life-from your career to buying a car to buying other goods to buying property to negotiating in relationships/family etc.

As a solicitor, I have to negotiate often on behalf of clients, and I have made it my business to study the top negotiators to do the best job I can.

Do you want to discover how to negotiate effectively? That’s what I am going to take a look at in this piece, and by the end of it you will be in a far stronger position to negotiate anything.

Sounds good?

  1. The Most Important Negotiation Tactic-Detachment

The single most important tip is not to care too much. If you do, and you make it blatantly obvious that you very badly want this car/house/suit/holiday, you weaken your negotiating position from the outset.

Because the other party knows how badly you want it. What you need to do is maintain an air of detachment-sure, you want the thing, but not that badly. You are ready to walk away if the deal is not right.

As soon as the other party things, “Jeez, this guy is going to walk away, he must have other options”, you are in a far stronger position.

And giving this impression is entirely within your control.

So, care, alright, but not too much.

Also, if and when you are walking away because the gap between you is too large, and the other party offers you his business card “in case you change your mind”, don’t take it. Reverse the balance of power by giving him your business card or contact details, and tell him, “give me a call if you change your mind”.

Remember, you don’t have to buy this car at this garage, you can buy a different car or not buy one at all. But you have the money, and he needs the sale.

There are two ways to ensure you don’t care too much:

  1. Get someone else to negotiate for you
  2. Recognise the difference between loving and liking-think about how you will feel in 20 years’ time about this thing you are trying to acquire. This will allow you to become more detached.

2. Maximize the Other Party’s Investment/Commitment

If you can get the other party to invest a lot of time in trying to win you over it puts you in a stronger position. Why?

Because they have already invested quite a lot in you. And we know that the more a person has invested in something the more desirable it becomes for them.

Let’s say you are buying a motor car, or indeed anything in retail, and you spend a lot of time at the car dealers, but don’t buy. The car salesman has invested quite a lot in you, yet has got no return whatsoever.

Then you go back another day, and spend even more time discussing the potential deal. The more time the car salesman spends on you the more reluctant he will be to see you walk off and go to another dealer. He is far more likely to cave after spending all this time, especially if he knows he has competition.

You will, of course, have told him you are looking at other cars in the competitor garage.

3. Start Friendly and Cooperative With an Air of Incompetence

If you start friendly and cooperative you can always get more aggressive and adopt a “tough guy” stance later on.

But if you start with the “tough guy” stance you will have no credibility later on when you try to be nice and friendly, and claim you misspoke.

If the other party starts aggressive, let them.

Take it, take notes because inside they are thinking “this is going to be easy” when, in fact, all they are doing is investing more time in you. Ultimately, this will make it harder for them to walk. They will be like someone investing a load of money into a slot machine and being encouraged to try another machine.

No way will they walk, because they have put too much into this machine and it must be due to payout.

You want to be more like the private investigator Columbo than Confucius, the Chinese teacher and philosopher.

If you appear to be incompetent, or inexperienced and say to the other party, “look, I’m new to this, you are extremely experienced and have been around a long time, maybe you could help me here” there is a good chance they will respond well to this approach.

4. Deadlines are Important but Negotiable

The vast majority of concessions and deals are done towards the end, near the deadline. Don’t be afraid to exploit this fact.

For example, you spend a good bit of time negotiating the purchase of an expensive piece of clothing. Just when the vendor is happy he has you on the hook, and you are now due to pull out the credit card, you say, “can’t you throw in a couple of ties?” You will have a great chance of getting the ties, or a few pairs of socks, or whatever is appropriate.

But deadlines are the product of negotiations, therefore are negotiable. However, the passing of a deadline can actually be the opening up of an opportunity.

How?

Ask, as they are quitting, “where did I go wrong?”. They will say, “when it’s over, we’ll tell you”.

And another deadline can be negotiated. Things are never over while relationships continue.

How many times have we seen political deadlines slip in the North of Ireland, for example, but eventually agreement is reached? It’s never over until it’s over.

Conclusion

These 4 principles will serve you well the next time you need to haggle or negotiate anything. It may be in your job, with your family, in your business, or just shopping.

You won’t need them all at the same time, but one you will need is the ability to give the impression of being able to walk away without batting an eyelid.

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Business For Sale

Buying and Selling a Business in Ireland-Some Key Decisions and Considerations

If you are thinking about buying or selling a business in Ireland the principal decision you will have to make at the outset is how you will structure the transaction.

There is essentially two methods of carrying out a transaction-

1)   A share purchase

2)   A purchase of the assets and liabilities of the business.

(This part of our Irish business law series which deals with some of the many issues surrounding small business in Ireland today.)

The most popular method is by way of share purchase but you do need to carefully weight up the pros and cons with your solicitor and accountant.

Purchase of assets

This method of buying a business has the advantage of allowing you to choose which assets you will buy and which liabilities you simply will not take on.

It does run the risk though of being challenged subsequently by a creditor who has not been paid and whose liability you have not taken on as part of your purchase.

Comparison of the two methods

Asset Purchase

As the buyer you will choose which assets and which liabilities you are taking on.

However it is difficult to get your hands on any tax losses of the target company and you many end up paying stamp duty of up to 9% depending on what assets are included in the deal.

Share Purchase

With a share purchase you will only pay stamp duty at 1%, regardless of the value of the target business.

The employees of the company will be taken on as a matter of law as part of the transaction; you may however be able to benefit from any tax losses which pass from the target company.

All assets and liabilities pass as part of the share transaction so the potential for liabilities rising up to bite you down the road is high.

Due diligence essential

It is absolutely vital that proper due diligence is carried out before buying a company or business.

Depending on the size and complexity of the target business it may be necessary to carry out due diligence under the following heads (this is not an exhaustive list)

  • Insurance
  • Legal
  • Accounting
  • Environmental
  • Statutory obligations (CRO obligations included)
  • Title
  • Taxation

Other critical issues to be dealt with include

  • Warranties (statements given by the vendor to the buyer in relation to the business being acquired).

Warranties would normally cover matters such as the target companies accounts, pending litigation, taxation, employees, assets, liabilities and essentially all aspects of the companies affairs.

  • Disclosure letter ( a letter from the vendor to the purchaser which sets out where the target company has any issues in relation to the general warranties already provided).

This might include any problems the target company/business has in relation to employees, title to property, insurance, banking facilities and any number of other areas where the actual position on the ground deviates from the warranties given in the agreement to sell.

TUPE

The TUPE (transfer of undertakings) regulations are also of critical importance when buying or taking over a business. The existing staff enjoy significant protection under these regulations and, by and large, any liabilities arising from the failure to properly adhere to TUPE will rest with the new employer/purchaser.

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Business and Company Law Business For Sale Start Your Own Business

7 Steps to a Good Small Business Plan

The longest journey begins with a single step.

A good small business plan is critical to the success of any enterprise.

Whether it is a formal document or written on the back of a cigarette packet it is an essential first step on the road to building your small business.

Even though we in Ireland are in the midst of the worst economic situation that has ever prevailed many people are still intent on setting up their own small business.

And the first critical step in that process is to start with a small business plan.

This can take many forms but most people are agreed that there are a few critical areas which must be addressed .

1. Overall tone of your small business plan

You need to be clear and concise with your plan with clear objectives/goals and a clear strategy. It should be factual, not aspirational, and easy on the eye with plenty of white space.

2. Summary

The summary should be able to convey in a few sentences your strategy and goals and highlights the positive parts of your plan. You need to think of the elevator pitch ie can you describe your plan succinctly to a stranger if you met him/her in a lift and were travelling from the 5th floor to the 1st.

3. Description of the business

This part of your small business plan should set out clearly the industry, type of business, any company history, the legal structure to be employed, any trading history and your vision for the future.
You will need to describe the USP(unique selling proposition of your business) and how you will grow your product/service with realistic achievable goals.

4. Marketing and Sales

You will need to set out how you will market your business and obtain sales, your target market and how you will handle competition if and when the squeeze is put on your business. You will need to show some solid market research in this section and demonstrate that you know the industry that you will be competing in.

5. Your People

This part of your small business plan will deal with your people, your key personnel and will include your professional advisors such as solicitor and accountant. You will also outline any recruitment plans you have and set out your salary structure which will show also that you are planning for growth.

6. Your operations

This section will essentially set out how you operate your business and include the location of your business, any production facilities if appropriate and information technology systems which should be robust enough to accommodate your future growth plans.

7. The Financials

This section will include your realistic achievable forecasts, both of cash flow and profitability. It will also be critical to outline any capital requirements you will have into the future and demonstrate that you have actually planned for the growth that you forecast elsewhere in your small business plan.

These are the essential parts of a decent small business plan and can obviously be adapted easily depending on your particular circumstances and individual requirements. A good small business plan should be an asset to you when you walk into any meeting with a financier/investor/bank and should reflect your professionalism and overall business approach.

Make sure that it reflects well on you and your company or fledgling enterprise.

Learn more about small business in Ireland here.

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Business and Company Law Business For Sale Start Your Own Business

Franchising-Negotiating a Franchise Agreement in Ireland-30 Questions You Need to Ask

franchise-law-ireland

Franchising can be a great way to start your own business.

And the failure rate for franchises is much less than for non franchise start-ups.

But you still need to do your homework and ask and be satisfied about many questions which you might not think about in your enthusiasm to start your own business.

The franchise agreement from a major franchisor will generally be on a take it or leave it basis.

That is the franchise agreement will not be negotiable as the franchisor can’t afford to negotiate individual franchise agreements with each franchisee.

But that does not mean that you should not ask the right questions and satisfy yourself that the situation that arises when there is a dispute or the franchisee is incapacitated or dies is provided for.

1. What law governs the franchise agreement?

Many successful franchises in Ireland are not Irish companies but the law applicable for an international franchise may well be another jurisdiction.

2. What happens if the franchisee dies?

Is there provision in the franchise agreement for the franchisor to provide staff to run the business to keep the show on the road?

3. Is there a renewal option when the franchise agreement ends?

If there is are you happy to commit to sign a franchise agreement in say, 10 years time, having no opportunity to see the new agreement? What are the terms?

4. Can you sell the business?

Can the franchisor veto your purchaser?

5. When the franchise agreement is terminated is there a non compete clause?

For how long?

6. If the franchise agreement is terminated and the premises is yours, how much will it cost to debrand?

7. Is the training and system manual up to date?

When was it last updated?

8. Is there an advertising fee payable? Can it be justified?

Is there marketing spend on the brand?

9. Is there a management services fee? How is it calculated?

10. Does the franchisee have to inform the franchisor of any improvements he has made to the system?

11. Is the franchisor the owner of the trademark? And if not will he provide a licence to the franchisee for the use of any trademarks and intellectual property?

12. Who will own the premises?

Will the franchisor provide any advice in relation to location and premises? Is this provided for in the franchise agreement?

13. How long has the franchisor been carrying on business?

How many company owned outlets?

14. If the franchisor is supplying goods is there a credit limit?

Will a minimum stock of products be imposed? Is a vehicle required?

Will it have to be branded?

15. What books and records will the franchisee have to supply to franchisor?

16. Will a confidentiality agreement be required?

17. Who will pay for initial and ongoing training?

18. Is there a territory?

Is it exclusive?

Is it stipulated in the franchise agreement?

19. How long will the franchise agreement last?

Is it compliant with competition law requirements?

20. Is training provided for staff?

Is it ongoing?

21. Is more than 10% of the initial fee for use of the name and trademark?

Can this be justified?

22. What initial stock will be needed?

Will the franchisee have to purchase equipment, stationery from the franchisor?

23. What ongoing obligations has the franchisor as per the franchise agreement in relation to problem solving, management, finance and marketing, provision of staff in an emergency, research and development and maintaining and improving the manual?

24. Will franchisee be required to advertise locally?

25. Does the franchisor have the right to communicate with the franchisee’s customers?

26. Has the franchisor the legal right to purchase the franchise from the franchisee?

On what terms?

Is that in the franchise agreement?

27. Is the franchisor entitled to appoint a manager if the franchisee dies or is incapacitated?

28. Who is entitled to terminate the franchise agreement? On what terms?

What events will bring this about?

29. What will happen when a dispute arises?

Is arbitration provided for in the franchise agreement? Litigation?

30. Does the franchisee have to enter into any restrictive covenants in the franchise agreement?

When looking at a franchise agreement with a view to buying either a new franchise or an existing franchise, a close perusal of the franchise agreement with these questions foremost in your mind is a good starting point.

But only a starting point. You will need to engage a solicitor before signing any franchise agreement. Hopefully these questions may assist you in deciding whether a franchise is for you.

Good luck.
For more information about small business in Ireland click here.