How to Negotiate When a Company Has Two Owners

 

Q: When a company has two owners that are equally involved is it advisable to ask them to choose only one negotiator, especially at the final stages?

A: Negotiating with one owner of a company and convincing them to sell their business can already be challenging. The situation becomes more complex when the company you wish to acquire is owned by more than one person.

When you are dealing with a company that has two owners, our experience tells us that you are actually in two negotiations and you will want to have conversations with each individual. Since both owners are actively involved in the business now, you should assume that they will both be actively involved in the future.

Before moving down the path of multiple negotiations, first make sure you understand their operating agreement. It may be that one of the owners cannot call the shots based on the legal documentation that papers their partnership. Once you have an understanding of how the company is set up, you can begin handling the two negotiations.

While one owner may have control of the company, you absolutely do not want to have exclusive communication with this person. The controlling owner may accurately portray the situation in some cases, but on the other hand, they may blatantly misrepresent the second owner’s feelings and thoughts.

What we’ve found is with multiple owner – two or more – each owner has a different time horizon, different motivation to sell, and a separate list of things in their “equation” that will make the deal work. It ifs important that you have multiple conversations so you can negotiate the right deal for both owners.

* This post was submitted by Capstone Managing Director John Dearing. This question comes from our webinar “Successful Negotiation Tactics.” Learn more about Capstone’s webinar series.

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