Emotions & Human Behaviour in Business Sales
The 'art part' of a successful Business deal
Usually everyone focuses on the science of selling a business — the numbers and data, legal documents, and technical details. This all matters.
But the real story of business sales often unfolds in the emotional undercurrents.
After 22 years of deal-making, here’s my take on the psychological and human elements — the art — that have a bigger impact on a small business sale than most people plan for or realise.
In Australia businesses are bought and sold in two distinct marketplaces and the psychology and human behaviours play out in different ways.
1. The Listed Marketplace
Think www.SeekBusiness.com.au, www.edenexchange.com, and similar sites. I regard them as a digital lolly shop for small business buyers.
Here’s a really quick fly-over of how this marketplace typically rolls:
- Sellers (owners) want to sell fast, and they approach a business broker.
- Brokers take the listing (the more the better) and undertake some limited and basic sale preparation.
- Sellers pay to advertise to ‘potential buyers’ and target markets. But, really, it’s more of a lucky dip and scatter-gun (lack of) strategy.
- The listing goes live.
- Buyers browse. Initially you get some enquiries. Then enquiries dry up.
- Where there isn’t the upfront work to identify a pool of the most likely buyers, your sale price is the only lever. So guess what? When enquiries slow, a price drop becomes the recommended strategy. This often doesn’t help and more sellers’ time is burned, while the stress from not selling increases.
There are two really primal emotions at play here:
- Hope: Sellers list their businesses at a high price, unencouraged by brokers, to ‘test the market’. Innoncently they’re thinking why not? It feels good... you never know … and then time slips and reality bites.
- Trust: Sellers trust that advertising alone will work. No matter how glossy the advert is or how many ‘hits’ the business for sale site gets, it often doesn’t work and/or it takes an eternity to find the right buyer.
What should you do differently?
- Get your numbers right. Dig deeper and try to find out what other similar businesses are selling for – this is hard, but not impossible. There is an excellent pub test question here for you : Would I really pay that price for my business?
- Be realistic about timelines. Even if you set a realistic price, you still need to allow as much time as you can for buyers to find your listing and do what they need to be in a position to buy. It’s OK to test the market for a while, at say 20% above the target price, but at 50% above you’re almost certainly wasting precious time.
- Don't just rely on adverts. Create a list of likely buyers and be proactive in targeting them.
2. The Off-Market World
In B2B and industrial sectors, this is where most deals happen. But off-market sales are also occurring in a range of other industries and sectors more frequently.
This is how it works;
- Big players monitor the market and quietly approach their target businesses.
- Sellers are flattered or blindsided.
- Information is either over-shared or withheld — both can be dealbreakers.
- Power dynamics are lopsided — or at least feel that way to the business owner.
Emotions at play:
- Power: Buyers definitely have clout. But sellers should not forget they have leverage too.
- Ego: Everyone brings it. You need to use it wisely. Mismanaged, it ruins deals.
What to do differently:
- Business owners should ask buyers better and tougher questions to rebalance power. It’s just not a one-way process.
- Acknowledge each other's objectives and intent. This can help humanise the deal. There are ‘good’ acquirers. They are disciplined but will work with sellers of quality businesses to create a deal that works both ways.
- Don’t let advisers overplay their hand, especially if you, the buyer and seller, are going to work with each other post-deal.
Some advisers inflame ego or feed unrealistic hopes. The best ones challenge your thinking, ask the hard questions, and keep the process grounded.
If you're choosing an adviser, ask: “Do they know what I really want?” And: Will they tell me the truth, even if it’s hard to hear?”
A Four-Step Emotional Prep Checklist for Sellers
- Understand there’s a trade-off between price and time.
- Know why you’re selling. Be clear that’s what you want to do – be honest with yourself.
- Define for your broker a list of non-negotiable deal terms - personal and/or emotional. The process of selling is stressful enough, so being clear upfront on what a good deal for you looks like, the less pain you’ll have later.
- Choose advisers who keep you accountable – not just agreeable.
The bottom line on EMOTIONS IN BUSINESS SALES
It isn’t fluffy to accept that emotions like hope, fear, trust, ego and power impact how we, our advisers, and potential buyers, think and behave. In fact, it’s deal-critical. And we all need to do more to better understand the upside of emotions, as well as the traps.
If you're planning a business sale, or advising someone who is, it’s time to start mastering the art part — not just the science.