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WHEN NEGOTIATING SELLER RETENTION, REMEMBER MOST SELLERS ARE LOOKING FOR MORE THAN A CHEQUE



We recently conducted a site visit, where the buyer decided not to remove his sunglasses for the whole meeting. He peered unnervingly over the lenses from time to time in a half attempt to make eye contact.

In fairness, they were expensive and very impressive shades. He looked striking. Though this was a business meeting over a multimillion-dollar asset. Not brunch at Bondi.

At the end of the meeting the seller had one word, “douche”.

When purchasing a business, it is common for buyers to request a seller retention agreement. This agreement typically requires the seller to stay on as an advisor or consultant for a period after the sale to help with the transition.

How much of a fit do you think you have positioned yourself in the eyes of the seller? Presenting well builds trust and credibility with the seller. If the seller is turned off by the presence of “douchiness” in a buyer, they are less likely to agree to transaction terms, especially a seller retention agreement.

Presenting well, does not just refer to physical appearance, one can present well in a commercial capacity (or not).

For buyers seeking to negotiate a Seller Retention Agreement, we recommend:


  1. Present a strong business plan that shows your plans for growth and stability and why you need the seller to help you achieve this and maintain the current business performance in the short term.

  2. Include a brief Bio demonstrating your prior experience and qualifications, and show that you are capable of managing a business effectively.

  3. Discuss working capital requirements so that you have the Seller’s guidance based on their qualified opinions of the business and your plans.


By doing these 3 things, you will quickly stand out as a buyer who is serious, and worth continuing conversations with, which in turn will serve you well when it is time to negotiate.

Importantly, if there are multiple buyers interested in the same business, which there always are for the good ones - the seller is more likely to choose the buyer who presents themselves in the best light, even if it’s not necessarily the best offer. Most sellers are looking for a “fit”, not just a cheque.

In conclusion, be the opposite of a “douche”.

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