When I was working with the CEO of a $75M recycling company on a potential sale to a private equity-backed competitor, I saw firsthand how critical leverage can be in negotiations.
The owner was in a strong position. If the terms didn’t meet his expectations, he didn’t need to sell – he could keep operating profitably. That simple fact changed the tone of every conversation.
Whenever the buyer’s team attempted to re-trade or shift away from the original agreement, he and I would align quickly, and I’d cut off their access to the virtual data room. The message was clear: we won’t proceed on those terms.
Every time, the buyers came back. They knew losing the deal outright was worse than adjusting their demands.
Why Leverage Matters So Much
Buyers have one goal: close the best deal they can for themselves. As you get deeper into the process, you become more invested in terms of time, energy, and emotion. That’s when it’s easiest to pressure a seller into giving up ground.
However, this doesn’t always work if the seller has leverage. If you can keep operating successfully without the transaction, or if you have multiple suitors at the table, you aren’t trapped. You can say “no.”
What Founders Should Learn from This
Obviously, every situation is different, and sometimes you won’t have the below options. That being said, this is the selling position you should be trying to create:
- Operate from strength, not desperation. The best time to negotiate is when your business is healthy and you don’t need the deal.
- Create alternatives. Whether it’s multiple buyers, a solid balance sheet, or simply the option to hold onto the business, alternatives give you power.
- Be prepared to walk. The willingness to shut down talks is often what earns respect – and better terms.
If you don’t have leverage, you’re negotiating uphill, but when you do, you control the outcome.