Handling the Commission

Handling the Commission

Have you had sellers try to negotiate your commissions? Here are some “suggestions” (tongue-in-cheek on some of them) on how to respond to the seller who wants to negotiate your fee before the business sells:

• “Mr. Seller, you’re asking me to reduce my commission from 12 percent to 10 percent. Quite frankly, if our commission rate were 10 percent I would not have told you it was 12 percent. I’m not going to start off playing games or lying to you about our firm’s commission schedule.”

• “Our firm has been able to sell more businesses in a shorter period of time than almost any other firm locally (assuming this is true) plus I feel that we can get closer to your asking price than anyone else. It seems to me that you are coming out way ahead money-wise on this.”

• “Mr. Seller, if I am so ‘wishy-washy’ that I would cut the commission upfront, can you imagine what I will do when a buyer makes an offer? You want me to be strong and not let a buyer push me around when it comes to your price – that’s how I feel about our commission. We earn every dime of it.”

• “Mrs. Seller, I see that you have a new Mercedes in the parking lot, and I noticed you are carrying a Gucci bag and have a Rolex watch –you obviously want the best and are willing to pay for it. I am the best and I’m worth it.”

• “Mr. Seller, I am willing to spend my time, my money, my knowledge and my years of experience to sell your business – and none of this is costing you a nickel. I have to sell your business to recoup all of this. Now, if you’re willing to pay me upfront for all of my expenses, then maybe we can talk…”

If a seller keeps pushing you to take less than your standard fee, try this:
• “Mr. Seller, there are only two people who are interested in seeing that your business sells at the price you are asking, and one of them is losing interest very quickly.” (We guess this comes under the category of things we wished we had said.)

 This is an old one, but still worth mentioning.
• “Ms. Seller, you’re asking me to reduce my commission from 10 percent to 8 percent. That’s a 20 percent reduction in my compensation. I’ll make a deal with you, reduce your price by 20 percent, and I’ll do the same.”

Many sellers really don’t know all the steps necessary to sell their business. Some years back we came up with a checklist. We titled it a Statement for Services Rendered. It might be a great commission-cutter-stopper to show a seller or potential seller exactly what you do for them. Then, after they have reviewed it, you can ask them which of the services they do not want since they’re apparently not willing to pay for the full list of services.