Mastering Negotiation: The Art of Pre-Framing in Business Deals

Summary

The script outlines an eight-step framework designed to tactfully negotiate business deals, particularly for acquiring businesses under unrealistic valuations without appearing condescending. This method involves building rapport, strategically shifting blame to external factors like bank valuations, and gently guiding the seller to understand the realistic value of their business. The framework aims to prepare sellers for annuity offers, combat broker barriers, and establish a logical, indisputable narrative for negotiation. It emphasizes timing and communication skills, warning that it may not be effective for everyone, especially those who come across as naturally condescending or poor communicators. The approach combines education, prophecy, advocacy, and exploring alternatives beyond the initial financial offer, seeking to understand what truly matters to the seller beyond money.

Takeaways

• 🙂 The AP step framework allows for persuasive communication without direct insult, aiming to prepare recipients for lower valuation offers in negotiations.
• 💡 The framework consists of creating a 'like bridge', blaming external factors (e.g., the bank), prophesizing common challenges, presenting a solution, and emphasizing the issue lies with the situation, not the person.
• 🙋‍♂️ It is designed to help in negotiations by logically and indisputably explaining why a business might not be worth as much as the owner believes.
• 😎 The approach can be applied beyond business deals, such as in personal conversations or negotiations with a spouse.
• 💰 The framework is particularly useful for overcoming 'broker walls' and acquiring businesses by framing the negotiation in a logical, non-confrontational manner.
• 📝 Pre-framing, the initial step, involves setting realistic expectations about the feasibility of cash payments in business acquisitions.
• 💭 Prophesizing about future challenges and offering solutions can help build trust and open dialogue for negotiation.
• 🙇‍♂️ Emphasizing 'it's not me, it's you' shifts the focus from personal inadequacies to external valuation concerns, potentially making the conversation less defensive.
• 📌 The timing and context of using this framework are crucial for its effectiveness, especially aligning it with the negotiation stage.
• 🙏 It encourages exploring underlying motivations and values beyond money, aiming for a more comprehensive understanding and agreement.

Q & A

What is the purpose of the AP step framework?

The purpose of the AP step framework is to help individuals present and negotiate offers, particularly in business acquisitions, in a logical and non-confrontational manner. It aims to enable the speaker to communicate effectively, even potentially negative information, without directly offending the other party.

Can the AP step framework be applied to personal conversations, such as talking to a spouse?

Yes, the AP step framework can be adapted for personal conversations, including discussions with a spouse, by using its principles to communicate effectively and empathetically.

What is the 'like bridge' in the AP step framework?

The 'like bridge' is a step in the AP framework where the speaker establishes common ground or a shared understanding with the listener to foster a positive connection before moving on to more challenging topics.

How does the AP step framework suggest handling objections or concerns about business valuation?

The framework suggests addressing objections or concerns about business valuation by 'blaming the bank,' meaning attributing the valuation issues to the bank's lending criteria rather than the individual's personal opinion, to depersonalize the objection.

What is the 'pre-offer preframe' in the context of the AP step framework?

The 'pre-offer preframe' is a specific phase in the negotiation process, according to the AP step framework, where the groundwork is laid before making an offer. It involves preparing the seller for the offer by setting expectations regarding the feasibility and common practices of business acquisitions.

Why is timing crucial in applying the AP step framework?

Timing is crucial because the effectiveness of the AP step framework depends on applying its steps at the appropriate moment in the negotiation process. Using the framework too early or out of context can lead to misunderstandings or reduced effectiveness.

How does the AP step framework propose to overcome the 'broker wall'?

The framework suggests using 'pre-framing' as a tactic to overcome the 'broker wall,' which refers to the barriers and requirements set by brokers before allowing potential buyers to view business financials. Pre-framing helps to set expectations and navigate these requirements more effectively.

What does the 'it's not me, it's you' step entail in the AP step framework?

This step involves shifting the focus away from the speaker's own limitations or decisions and instead emphasizing external factors or the listener's situation as the reason for any challenges or decisions being made, particularly in the context of business valuation and acquisition negotiations.

Why is the AP step framework not suitable for everyone?

The framework may not be suitable for individuals who naturally come off as condescending or are not skilled communicators, as it requires the ability to deliver messages in a thoughtful and effective manner without alienating the listener.

What is the significance of 'what else' in the AP step framework?

The 'what else' step encourages the speaker to explore additional concerns or priorities the listener may have beyond the immediate topic of discussion, such as financial compensation in a business sale, to understand their broader needs and motivations.

Outlines

00:00

😊 Introducing an 8-step framework to logically convince sellers to agree to a lower valuation without confrontation

The speaker introduces an 8-step framework he created to logically walk business sellers through understanding why banks won't finance a purchase at their high asking price. Steps include: preframing expectations, creating a "like bridge", blaming the bank's valuation, prophecizing other buyers will have the same issue, saying there is a way to meet the asking price, advocating and helping connect with better-fit buyers, clarifying it's the bank that disagrees not the buyer, and asking what's important beyond money.

05:01

😃 Providing examples for how to execute the 8-step framework when preparing to make an offer

The speaker gives examples for how to apply the 8-step framework, such as setting context that business purchases typically use financing, comparing to banks not lending more than a property's appraised value, and logically justifying reasons a bank would not finance at the seller's asking price. He emphasizes tailoring the justification to the specific business, executing this at the right stage of diligence before making an offer, and asking what's important to the seller beyond money.

Keywords

💡AP step framework

The AP step framework is a strategic approach presented in the video to communicate effectively, particularly in negotiations or sensitive discussions, without being overtly offensive. It involves a sequence of steps designed to prepare the listener for a potentially disagreeable message in a manner that is logical and less confrontational. The framework is used as a tool to express one's point of view or assessment, such as devaluing a business proposition, in a way that the recipient is more likely to accept or consider without feeling insulted.

💡Like bridge

The 'like bridge' is a concept within the AP step framework that involves building rapport or finding common ground with the person you are communicating with. By establishing this connection, the speaker aims to make the listener more receptive to the subsequent message. It's a strategic step to ensure that the conversation remains constructive, even when delivering assessments or opinions that might be unwelcome to the listener.

💡Blame the bank

In the context of the video, 'blame the bank' is a tactic used to deflect potential negativity away from the speaker and onto an external entity, in this case, a bank. This strategy involves attributing any unfavorable opinions or decisions regarding financial matters, such as a business valuation, to the bank's policies or assessments rather than the speaker's personal views. This can help in maintaining a positive rapport with the listener while still conveying the necessary message.

💡Prophesize

The term 'prophesize' in the video refers to predicting future events or outcomes in the context of the conversation, particularly those that might arise if the listener continues on their current path or insists on their perspective. This step aims to make the listener consider the potential consequences of their actions or beliefs, encouraging them to be more open to the speaker's suggestions or viewpoints.

💡Annuity offer

An annuity offer, mentioned in the context of preparing a seller to receive, likely refers to a proposal involving periodic payments over time instead of a lump-sum payment. This concept is used in the video to illustrate the kind of negotiation or offer that might be made using the AP step framework, especially in situations where the initial asking price or valuation by the seller is deemed unrealistic.

💡Broker wall

The 'broker wall' is a metaphor used in the video to describe the barriers or obstacles that potential buyers face when trying to access detailed information about a business for sale. These obstacles can include extensive requirements for personal and financial disclosures. The AP step framework is suggested as a method to navigate or circumvent these challenges during the negotiation or due diligence process.

💡Pre-offer pre-frame

This term refers to a specific stage in the AP step framework where the groundwork is laid before making an actual offer. It involves setting expectations and context for the offer that will follow, aiming to align the seller's perspective with the reality of the situation as seen by the buyer, thereby making the actual offer more palatable or acceptable.

💡Advocate shift

The 'advocate shift' is a phase within the AP step framework where the speaker positions themselves as an ally or advocate for the listener's interests. By expressing a commitment to finding a mutually beneficial solution or offering help beyond the immediate transaction, the speaker aims to build trust and goodwill, making it easier to navigate potentially difficult discussions or negotiations.

💡SCORE/MUD

SCORE/MUD represents a set of criteria (Score, Motivation, Urgency, and Distress) used to evaluate the seller's position or the urgency of the sale. Understanding these factors can help in tailoring the approach using the AP step framework to address the seller's specific needs or concerns, thereby facilitating a more effective negotiation.

💡Lever

In the context of the video, 'lever' is likely an acronym or concept related to the factors that influence a seller's decision to sell, such as legacy, employee welfare, or customer care considerations. Recognizing and addressing these non-financial motivations as part of the AP step framework can be crucial in reaching an agreement that satisfies all parties involved.

Highlights

Introduction of an eight-step framework to influence others without being offensive.

The framework's application ranges from business negotiations to personal conversations.

Emphasis on logical and indisputable communication to adjust someone's valuation of a business.

Use of the framework to prepare a seller for an annuity offer.

The technique for bypassing excessive demands from brokers ('broker wall').

Warning that the framework might not work for everyone, especially not for naturally condescending individuals.

The importance of effective communication and timing in the application of the framework.

Explanation of the 'pre-offer preframe' timing within the deal negotiation process.

The framework's foundation in undeniable logic to pre-empt negotiation objections.

Strategies for shifting blame to external factors (e.g., the bank) to maintain rapport.

The 'prophesize' step to manage expectations about future negotiation obstacles.

The 'advocate shift' to demonstrate commitment to finding a solution.

Use of the framework to logically justify the bank's concerns to the seller.

Incorporating the seller's non-monetary values into the negotiation with the 'what else' question.

Techniques to avoid making the conversation solely about money.

Transcripts

do I have your permission to teach you

my top secret AP step framework you can

literally call people idiots without

calling them idiots it's powerful stuff

we're going to create something called a

like bridge then we're going to blame

the bank then we're going to prophesize

then we're going to tell them there is a

way then we're going to say it's not me

it's you you see how this can be used in

all kinds of deal making this huge you

can actually translate this eight step

to talking to your spouse we can do that

in a minute if you want to right so

we're going to use this eight-step

framework you can use it to prepare a

seller to receive an annuity offer

that's what I want you to use this for

the most it's great for helping people

understand in a nice logical

indisputable way without being

condescending or an that your

business is not worth anywhere near what

you think it is you can literally call

people idiots without calling them

idiots it's powerful stuff right that's

what I want you to use this for I want

you to use this as helping them

understand why the bank's not going to

give me money for your business because

it's your valuation is outrageous but I

can do it in a way where they're

literally thinking me some pretty

powerful stuff okay it's also Al great

to combat what we call a broker wall

where you want to go look at these

businesses and yet you've got to give

blood type your wife social and all

kinds of crazy stuff and they want to

see liquidity statements and your bank

statements and seamen samples just to be

able to see the financials we can get

around that as well using pre-f framing

okay so let's go before I teach you this

I want you to know it's not going to

work for everyone this is my disclaimer

Carl and my lawyer told me had to say

this right if you're an this is

not going to work well for you then just

going to be honest if you naturally come

off as condescending which is what a

beautiful gift God gave you this is not

going to be very helpful for you right

if you're not a good communicator and

just no matter what you do and say

people don't really understand the words

coming out of your mouth we need to work

on you a little bit more but this could

help right I just want you to know that

you can't have this strategy and think

it's going to fix everything going on in

your life right and I and I do

understand I've had a lot of people tell

me hey it's easy for you to say that

you're so so smooth and you flow and I

already have my 10,000 hours I've been

teaching sales for a long time and

negotiations this is what I do but I'm

telling you the only way that someone

who's truly gifted let's take like a

pace morie truly gifted at the art of

talking and communicating with Sellers

and people the only way for him to be

able to help you learn his intangible

skill sets his not yours is to put them

into Frameworks right and that's what I

do is I put my magic sauce my magic dust

into a framework so you all can use it

right but I just want to make sure you

understand that okay so here's the eight

step framework we're going to give you

the slides you can take as many pictures

as you want I like when people pull

their camera up and then I pull the

slide back just kidding timing is

everything by the way if you use this

the wrong time it's not going to work

for you right if you look at this

timeline deal origination initial

vetting of the deal deeper vetting

valuation deal structure right before

you're going to make an offer this

eight-step framework is called the

pre-offer pre-frame the pre-offer

preframe you see that star that's where

it goes everybody got it what happens if

you do it the first time you ever talk

to the

seller it's not going to work let's keep

going so here's the framework first time

I ever took it out of my head and put it

on a paper it's been in my head a long

time been using it for a long time this

is the picture of that paper it was in

England Carl and I were hanging out in

Birmingham how do you say Birmingham

like a Birmingham

Birmingham that's how they speak there

if you all behave Carl will do his

around the UK uh his voice accents it's

pretty entertaining okay so we're going

to pre-frame we're going to educate and

set the stage we're going to create

something called a like bridge then

we're going to blame the bank then we're

going to prophesize then we're going to

tell them there is a way then we're

going to say it's not me it's you the

opposite of how you break up with people

in the middle school and then lastly

we're going to say what else you guys

ready for this let's jump in preframe

it's super simple remember this is not a

text or an email I'm going to bring you

an offer that's it it's not feasible or

common practice to pay cash for a

business purchase like this and just

like real estate like an investor

they're not going to necessarily come in

and pay cash for an investment property

they're going to get some sort of

financing or go through a the bank or

get a loan right and to buy your

business I'm going to be applying for

financing whether you are or not it

doesn't matter got me so I'm going to

bring you an offer and it's not feasible

or common practice to pay cash for

business Acquisitions like this and just

like if I was a real estate investor

buying a investment property I'm going

to be going out and applying for a loan

is that pretty simple great and when

buying a property with a mortgage you

know the bank's not going to give you

more money than the appraised value I

want you to stop and think about this

for a second the reason why we do this

is we want to have their logical brain

not be able to dispute this as fact does

that make sense I'm not leaving this

open for interpretation I'm not asking

them for their feedback or their opinion

okay I'm going to bring you an offer and

it's not feasible a common practice to

pay cash for acquisition purchases like

this and then just like if I was a real

estate investor and I was about to buy a

property I'm going to get some sort of a

loan and I'm going to be applying for

financing to buy your business okay and

just like when you buy a property with a

mortgage the bank's not going to lend

more money than the the house is worth

okay and based upon the finances that

you've given me and the figures the

bank's telling me that they're not going

to finance this purchase at your asking

price this is literally about 20 25

second conversation so far one thing to

be really clear is I'm not stopping and

saying is this making sense I'm just

talking they don't get to talk till I'm

done does that make sense right keep

going so prophesies and by the way this

isn't just for me but anybody else who

comes along after me looking to purchase

your business is going to have the same

issue okay is there any way for anybody

to dispute this so far no you see how

this could work it's interesting right

so there is a way I just want to let you

know I am exploring a way to be able to

purchase your business and give you much

closer to your asking price than the

number you're looking for and I want you

to understand that I am committed to

finding a way to make this work right I

called this The Advocate shift and

beyond that you want to take it to the

next level and I also work with a lot of

people who are also acquiring businesses

like yours and even if it's not a good

fit for me I will do my very best to

help you in any way I can and connect

you to somebody who may be a better fit

buyer right pce even gave an example

that earlier right it's a beautiful

thing okay and it's not me it's you and

in this case specifically it's not my

personal financial profile that's

holding this back actually the bank

doesn't agree with the valuation and

they have some worries right and this is

where there's a lot of different ways to

say this and you need to say it and it

needs to be true for the business that

you're looking at you guys ready for

this there's lots of different things

but you say listen the bank's worried

about and we go back to Carl's

presentation around the translation of

value the transfer of value there's all

these reasons why a bank would say I'm

not going to loan money on that right

the business owner wears all the hats

the business owner has all the

relationships the fact that their

business on the pnls has been showing a

downward trajectory over the last three

years the fact that your business has no

cash reserves and no access to any type

of savings where if hits the fan

you're kind of screwed there's all kinds

of different reasons that you could use

here right what about the fact that the

business has no contractual revenue or

maybe it's an Amazon Ecom store and the

business like literally you don't even

have access to your customers do you see

how you can blame the bank and say this

is what the bank's worried about and

what's so cool about that is they're not

taking it as a personal dig from you

you're blaming the bank and you're not

just blaming the bank but you're

logically justifying it in a way that's

almost

indisputable maybe you'll get lucky and

it's some of this stuff's not true and

maybe they'll come back and say hey

think you may have the wrong impression

but actually this is what's going on do

you see why this is very important to do

this at the right time this isn't the

first conversation you've ever had you

want to do some new diligence you want

to vet the deal you see how this can be

used in all kinds of deal making this

huge you can actually translate this e

step to talking to your

spouse you can we can do that in a

minute if you want to right so after we

blame the bank and then we specifically

logically Justified and backed up why

the bank was

worried I'll put that back up there for

you for just a second we also say what

else right what else is important to you

imagine we can come to terms today

imagine we can get you your asking price

for this business what else is important

to you besides just money

and I love saying besides just money

because it makes them feel like a

Scrooge McDuck or an to say it's

just the money it really does they're

like it's just the money it's like good

luck to you sir right that's where my

mind goes but I love that what else is

really important to you because if you

go to what Carl was talking about

yesterday there's two acronyms anybody

know the acronyms one was a

score mud score motivation urgency and

distress the other one was called lever

right we want to find out if they're

Legacy driven or they're wanting to

focus on their

like protecting their customers or their

employees like we want to find out what

else is really to be true okay so that's

the concept of the eight-step framework