Common mistakes when negotiating the sale price of a company

Selling a company is one of the most consequential decisions an owner or shareholder can make. While pricing the business correctly is crucial, the negotiation process involves far more than agreeing on a number.

Many transactions are undermined by missteps that don’t just affect the headline price, but also the structure of the deal, the timing of payments, the seller’s net proceeds, and even the future performance of the business after the sale. Below, we outline the most common strategic mistakes sellers make when negotiating the price—and how to avoid them.

1. Poor financial preparation before entering negotiations

A common mistake is underestimating how much the financial condition and structure of the business will impact the price. Issues such as excessive debt, non-recurring expenses, or weak reporting can create uncertainty for the buyer, leading to a lower offer or tighter terms.

Best practice:
Strengthen your capital structure, clean up financials, and identify areas of potential concern in advance. Enter negotiations with clarity and evidence that reinforces the business’s value.

2. Misaligned expectations between buyer and seller

Many sellers enter a transaction with inflated expectations about the value of their company—especially if they haven’t commissioned a proper valuation. Buyers, on the other hand, may come in with a different logic: focused on risk, future cash flow, or industry benchmarks.

Best practice:
Invest time upfront to understand how buyers think and value. Clarify the main levers of value early in the process and manage expectations accordingly. Price gaps are often not about disagreement—they’re about misalignment.

3. Overlooking how payment terms and structure affect the real price

The price on paper is rarely the amount that ends up in the seller’s bank account. Earn-outs, deferred payments, escrows, and holdbacks are all mechanisms used to bridge valuation gaps or allocate risk. If the seller doesn’t negotiate these terms carefully, the value received can be far lower than expected.

Best practice:
Look beyond the nominal price. Evaluate the conditions, timing, and structure of payments. A lower headline price with better terms may be preferable to a higher price paid over time under strict contingencies.

4. Failing to identify and address hidden risks

Undisclosed liabilities, legal issues, or operational inconsistencies often emerge during due diligence—and they almost always lead to price reductions, tougher terms, or even withdrawal. Many sellers are surprised when buyers adjust their offer late in the process.

Best practice:
Conduct a pre-sale risk review. Identify and disclose potential issues transparently. Proactive disclosure builds credibility and can help preserve value during negotiations.

5. Underestimating the role of the management team

Buyers don’t just acquire businesses—they acquire capabilities. The quality and stability of the management team is often a decisive factor in how the buyer values the company. If key executives are likely to leave, or if there’s a weak succession plan, the perceived risk increases—and the price drops.

Best practice:
Show that the management team is capable and committed. If needed, structure incentives or transitional roles to keep key people in place during and after the sale.

6. Ignoring tax and net proceeds implications

A seller might agree to a seemingly attractive price, only to later discover that taxes, legal fees, and adjustments reduce their actual proceeds substantially. The way the deal is structured (e.g., asset vs. share sale, jurisdictional issues, allocation of price) has major tax implications.

Best practice:
Work with tax and legal advisors early in the process to model different deal structures and understand net outcomes. Avoid surprises by planning for tax efficiency from the beginning.

Conclusion

The value of a deal isn’t just in the number—it’s in the terms, timing, risk allocation, and strategic execution. Selling a business requires far more than finding a buyer. It demands foresight, preparation, and the ability to manage variables that go well beyond financial statements.

At Sajor Consulting, we help our clients navigate complex negotiations with clarity and confidence—so they can protect value, avoid common mistakes, and close transactions successfully.

Thinking about selling your business?
Let’s talk about how to prepare and negotiate from a position of strength.