People put their heart and soul into building a successful business. Often, many years of energy, work, and sacrifice lead owners to feel attached to their life’s work in many ways. When it comes time to consider the sale of a closely held business to a private equity fund or other financial firm, this deep level of investment can make such a sale process a very emotional endeavor for the owner. Though the decision might make great business sense, it’s hard for some sellers to say goodbye to something that has been an integral part of their life and identity. As a result, they may experience a mixture of fear, anxiety, sadness, grief, resentment and doubt. These emotions, when elevated, can interrupt a seller’s ability to be rational and effectively navigate the many decisions they will encounter. So how should a private equity professional approach a potentially fraught negotiation with an emotionally invested seller in order to put together a successful transaction and achieve the best possible result? We asked our good friend, Jodi Coochise, a licensed psychologist and behavioral finance consultant and coach, to recommend her “Top 5 Ways” to approach a tense negotiation with a seller who is struggling emotionally with the decision to sell. Here are few things that you can do and keep in mind when dealing with an emotional seller in order to keep the negotiation grounded, focused and moving in a positive direction.
1. Model calmness. Before the meeting, make sure you are in a calm and relaxed mindset. If you know that the seller is struggling with the potential sale, it will be important for you to go into that conversation with patience and a calm demeanor. Focus on your own breathing, taking deep breaths before, during and after the meeting. Talking a slow, even tone can also help set the tone of the conversation and help the seller regulate their own emotions. As humans we naturally feed off the emotions of others and your relaxed energy will be contagious. 2. Don’t shy away from the emotion. Many professionals feel a strong aversion to emotional expression in their business relationships and try to avoid bringing up the obvious. Naming the emotion isn’t the same thing as turning the negotiation into a “therapy session.” But your willingness to acknowledge the seller’s emotional distress and the fact that it is clearly difficult to part with something that was their life’s work can help them feel more comfortable and reassured. 3. Recognize the value of listening! The goal of these conversations is to reach an agreement, and we can get narrowly focused on the details. However, with an emotional seller, ignoring the feelings can actually elevate their emotional reaction leading to a decrease in openness and lessening their willingness to compromise. Recognize that sometimes we need to slow down and just listen. Trust that they want to get back to business too, but they may just need a few minutes to say how they are feeling. Your acknowledgment and validation can calm them; helping them get back to a more rational mindset. Shifting focus or skipping over it can force them to bottle it up, which can lead to those emotions getting more activated. 4. Highlight motivations.Clarify and discuss the primary reasons for their choice to sell or exit the business. Exploring this in detail helps the seller reaffirm why they are taking this step. And this information will come in handy when the strong doubts, regrets or fear about the future come up. You can echo their words back to the seller, gently reminding them of the important factors that led them to this point and can help de-escalate the emotional reaction. 5. Help prepare them for what comes next. It may be a conversation that goes beyond the immediate sale negotiation, but asking them questions like, “what do you think you will do next?”, “in your first day after the sale is finalized, what do think you will do?” or “how do you think you will feel when this deal is finalized?” is time well spent. By asking these types of questions you are helping the seller start to think about next steps and create a game plan they can turn to when the reality sinks in.
co-authored by Jodi Coochise