Mastering Negotiation: The Art of Pre-Framing in Business Deals
Summary
TLDRThe 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
😊 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.
😃 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.
Mindmap
Keywords
💡AP step framework
💡Like bridge
💡Blame the bank
💡Prophesize
💡Annuity offer
💡Broker wall
💡Pre-offer pre-frame
💡Advocate shift
💡SCORE/MUD
💡Lever
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
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