Finance as a negotiating tool

At ASC, we have clients come to us at all stages of the purchase process. From enquiries all the way through to nearly-finished purchases, we’ve helped businesses of all stripes find the finance they need.

One interesting trend we’ve noticed over the years is that for clients who might be bidding on a business purchase, securing finance has had a direct correlation in success in their bid. There are a number of reasons that this might be, but we’ve highlighted 3 of the most common reasons securing finance has been useful in negotiations below.

1. You have the funds on hand

In many cases, if a seller sees that they’ve got a guaranteed source of income, they may choose a slightly lower bid for the sake of surety. Imagine – you’re selling an expensive car, and you have two bidders. One is £30,000, but they have to go away and try and organise where they’re going to get the cash from. One is £25,000, but they have the finance arranged and the cash immediately to hand. In that scenario, we think you’d be hard pressed to find a huge number of people who wouldn’t pick the slightly lower, but much more proven, bid.

2. It shows you’re committed to the project

If you’ve organised finance for something, then you’re committed to seeing it through. It’s not an easy process to organise finance, nor is it something you can back out of lightly. If you have the finance already organised, the other party can see that you’ve already committed to going through with it. You aren’t going to get “cold feet” and withdraw part of the way through without a good reason.

3. It sets an upper limit for negotiations

Linked to the previous point is the fact that when you have the finance sorted, both sides of the table have a clear limit to how far negotiations can go. You can try to haggle the price up or down within reason, but when you only have finance for a certain amount, there’s a very clear limit on how much you’re willing to pay. If a seller isn’t willing to accept that price, then it saves both of you time and effort by making that clear from the start, no back-and-forth needed!

ASC Finance for Business are Commercial, Business and Property Finance Brokers with 50 years of arranging faster, simpler, better finance for small businesses.

To speak to your local ASC Regional Director about getting finance, click here.

Finance as a negotiating tool