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Business negotiations often affects the viability of business deals or business partnerships. During every negotiation deal, whether you own a small, large or freelance business, the challenge is to determine which negotiation strategy to proceed with while keeping in mind the long-term outcome. Most business deals have similar objectives – a winning situation for both parties involved in the business deal. Rather than prioritizing the closure of the business deal, importance is given to the mutual agreements & long-term outcomes. Having prepared for such events in advance, businesses would not only be able to sell the business faster and more effectively.

Here’s how:

Gather the Decision-Makers:

To conclude any business deal positively, it is important to gather the right people to negotiate the terms with. As a business seller, identifying the decision-maker(s) of the business deal would consume less time & avoid misleading agreements. For example: During several instances of business deals, either one negotiation party was found in the situation where the negotiation was headed in a positive direction, only to find out the negotiator had to take further approvals from a higher authority. The best and most effective means to avoid such situations is to arrange a meeting directly with the person(s) at the authoritative level.

Preparation:

Being prepared is essential for any business activity, including during a business sale.

• Review the business buyer by internal factors such as financial documentation & external factors such as activities of other businesses – website, articles, client feedback and more.
• Recognize the actions of other market competitors & behavioral patterns such as the type of terms offered & prices.
• Identify the ‘wants’ of both parties. This will enable both parties in working towards a win-win situation, creating the desired outcome.
• Visualize future long-term conditions of both positive as well as negative results.

Professionalism:

Courtesy goes a long way in any relationship. The objective is to deal with any business situation in a professional manner. Any negative impact during the business deal may automatically reduce the chances of successfully closing the business deal or even eliminate future partnership or deals. Maintaining a long-term relationship between both parties should be the goal, whether the deal may be closed or not. Consider using the ‘mirroring’ technique – repeating words spoken by the business buyer (negotiator), will not only show your attentiveness but also show that you are taking their perspectives into consideration.

Openness:

Each stage of the business deal process demands a different quality from both parties. Limiting the deal to only one outcome may lead to non-closure of the deal. Understanding the dynamics during a deal is crucial for the business seller. Enhance your negotiation position by having fair alternatives, simply allowing you to make the best decision on how to proceed.

Time:

Hiring a lawyer or a business advisor would ease out the business sale process. The longer the negotiation takes to be completed, the higher the chances of disrupting the process. Promptness & active participation would result in the closure of the business deal. However, rushing or making compromises during the deal should be avoided. It is vital to comprehend whether time is with or against you.

Deal acceptance:

• Accepting the first offer you receive is often considered to be a mistake. Business Sellers should not settle for the first offered deal, instead consider a counter-offer at a higher price or better business terms.
• An effective negotiation tactic used by skilled negotiators during finalizing a business deal is setting an expiration date for you offer – this will ensure the business buyer takes the deal seriously.
• Every negotiation requires a draft version of the agreement. As a Business Seller, it is necessary to hire professional lawyers to prepare the agreed terms by both parties (something we already offer at Bexit during the negotiation stage). Documenting the terms also gives Sellers the opportunity to include reasonable terms that may not have been discussed earlier. In most cases, business buyers would not make drastic changes in the Agreement. Finding the perfect time and balance to share the draft agreement is key.

At Bexit, the negotiation stage includes the Pre-final Agreement between Business Sellers & Buyers which takes place in person, prior to signing the Draft Agreement Contract during which the lawyer is present. The objective is to assist business sellers & buyers to negotiate effectively & sell businesses securely and fast.

When we take a look at businesses all around the Kuwait Market, over the past years, we have observed that numerous businesses move closer to the end of their business life within a short period of time. The main challenge several businesses stumble upon is overlooking & exiting without a well-defined strategy. All successful entrepreneurs & business owners plan & develop their exit strategies at a very early stage of the business in order to make profits & acquire investors. A business exit strategy is a crucial step that entrepreneur’s take to think ahead & present a strategic plan to sell their ownership in a company to investors or another company. Developing an exit strategy should not be considered as a drawback, rather it could play a role in increasing your chances of a successful business by identifying the business’s failures and preventing the closure of the business too early. Create a balance & know when to close down a business and how to take into consideration the legal responsibilities.

Recognize the journey

The first step in developing a business exit strategy is to determine the success of the business & when you as a business owner might be willing to close & seal the business. The key is to identify several financial situations which are likely to take place in the future, thus influencing you in taking up realistic decisions while forming the strategy. The primary reason to forecast your business finances is to secure your personal investments & finances by preventing your business liabilities from leading you into a long-term personal debt. A crucial step is weighing out the pros & cons of how much would it cost you to keep the business running rather than hoping that the sales pick up.

An Early Exit

An unplanned-hasty decision can lead to a business closing its doors too early. In some situations, it is advisable to conduct a study before putting your business for sale on the market. Some business owners have experienced that announcing the closure of the business too soon, may lead to further debts and may get entangled in ongoing monthly rents, taxes or previous contracts, until the business is transferred to a new business buyer. In such circumstances, business owners prefer running the business to pay off monthly expenses rather than getting buried in debt. Have an understanding of which would cost you more money – a fully functional business or shutting down the business.

Allocate Assets

Create a list containing all the assets of your business – both tangible & intangible assets. Your list should include all machinery, supplies, office equipment, electronics, stocks, website & applications and should even consist of the business name & goodwill. In order to ease out the process, upon the completion of the list of assets, create another list of prospect buyers who would be interested to purchase your business assets & approach the buyers.

Paperwork & Transitions

Prepare a list to reduce the business’s legal liabilities – cancellation of contracts, business licenses & connect with existing customers, clients, suppliers & vendors to settle all legal matters. The transition of ownership can be extremely unsettling without a clear & defined plan. You must be mindful about the business buyer & the existing employees, as valued employees could be affected under the new management, which will eventually lead to a collapse in the business performance & brand image. To take a sidestep from such situations, every business should have an exit strategy that states the duties & responsibilities of the new business owner/s.

Public Relations

Ensure that all management and employees know the business’s long-term goals so they are prepared in advance but avoid informing them too early in the process as they may take up jobs at new companies before the closure of your business. Take into consideration the effect that the closure of the business will have on employees, clients & customers & make the announcement as easy as possible & beneficial for all; this would allow them to make decisions based on the provided deadline. It is also important to have successful sales & marketing strategies to demonstrate to the potential business buyer that the business is expected to generate profitable income in the future.

The Sale

Develop a Sales Proposal that reveals all the business’s assets, financial documents, yearly sales and budgets & the selling price of the business. Collaborate with a business broker to assist you in preparing your business for sale – Business Valuation, preparation of all documentation & discovering a suitable business buyer. Once the documentation is ready, find the most appropriate business buyer to ensure you receive the best value for your business. Approach all professional relationships developed over the years for recommendations & references on the business sale, which in its due course of time could lead towards selling a business.

Thinking of selling your business or looking to buy a business but you are not certain about the outcome? Choose to depend on a reliable professional. Choose Bexit Co.

One of the fastest-growing segments in the marketplace is said to be the sale of businesses online. For some business owners the decision to sell their business could be exciting while others could find it tricky. While browsing through the internet you will find numerous business listings that are priced from thousands to millions of Kuwaiti Dinars – so how did they determine the worth of their business? Coming up with the conclusion of what price your business is valued at should be of high importance. As a business seller, if you set your price too high, you most likely will not obtain interested business buyers. If you price your business too low, you are most likely to suffer the loss of a great deal of money. The marketplace for buying & selling of businesses is dynamic as the asking – selling price fluctuates continuously & the fair price could only be determined as the amount the seller is willing to accept & the buyer is willing to pay for the business.

Worth of Your Tangible Assets

This is one of the easiest methods to take when you are trying to identify the value your business is estimated at. Begin by creating a list of assets, both tangible & intangible assets. In the case of most businesses, the assets are considered into the business’s complete value but in some cases are not. Intangible assets like copyrights & trademarks are worth enormous amounts of money, thus focusing solely on the cash flow of your business is not enough to determine the worth of the business. If you are including these assets in the business sale, it is important to make sure potential buyers are aware about it. Another beneficial method would be to liquidate the assets prior to the sale of the business as it could recover your business value – if you had determined that the value of assets & the value of the business sale is similar.

Financial Indicators

Every business gains its positive value through a definite cash flow. We highly recommend consulting with your accountant or bookkeeper to gather & analyze the financial statements of the previous three to five years – this may include unnecessary expenses that would affect the success of the business operations. You are required to gather the Income statements – which shows your gross revenue, costs & the yearly profits or losses your business has incurred, the balance sheet – which would disclose the value of the tangible assets & liabilities, the cash flow statements – which reveals the amount of money paid & received from your business & how it may have resulted as a change in the business assets & the statement of owner’s cash flow also known as the statement of seller’s discretionary earnings (SDE) – which discloses the amount made by your business after backing out the non-recurrent & discretionary expenses & also serves as a basis for the sale pricing & is of primary interest to buyers. After all the documentation is in place & prior to the sale announcement, make sure to hire an attorney to analyze & evaluate all the information that would be used to validate the business success.

Base Price

Establish the target & minimum price for your business in order to negotiate better with prospect buyers. Estimate the business value using earnings multiple to gain key financial indicators, usually through revenue and cash flow. The multiples may vary depending on various factors such as the nature of the business & its geographic location. Generally, the business values range from one to four times of the annual cash flow. The estimated earnings multiplier is used to assess the important areas that would affect the future of your business – products, revenue, profits, customer base & even the business position in its respective industry. You would have to multiply the seller’s discretionary earnings (SDE) by the earnings multiplier to conclude with an estimated selling price.

Research

After concluding the projected business selling price, conduct a research on other businesses listed for sale within the same business category & type to analyze the area & price range. Professionals like reputed business brokers or appraisers could assist business owners to determine the business value – this would provide you with the direction & growth of your business as well as its strengths & weaknesses.

Avoid Emotional Judgement

As a business owner, you have undoubtedly invested a lot of time & resources into your business & the departure may be a huge challenge. It is completely reasonable for you to feel this way, however, your emotions should not intervene in the process of selling your business as you are more likely to overestimate the value of your business. Make sure to run your figures by a trusted professional to obtain fair judgement & straightforward feedback – this will increase your chances at a better sale & decrease your chances of losing money.

Business owners are encouraged to request assistance from the Bexit team.

December 2024•5 min read

With numerous businesses opening up & closing over the past few months, existing business owners & potential business owners are concerned whether their unique concepts would work in the Kuwait Market. A successful business is one that provides the market with distinctive solutions for problems or inconveniences faced by the common public which may have been overlooked. The objective is to simplify the daily lives of everybody by creating a demand & providing a solution they did not realize was a requirement.

According to Mordor Intelligence, “Kuwait vision for 2035 that articulates the Amir’s aspirations and is endorsed by the current development Plan is: “to transform Kuwait into a world class financial and commercial center, with the private sector leading economic activities, fostering competitiveness, increasing productivity, supported by viable public institutions, while maintaining the deep rooted values and national identity, towards achieving balanced economic and human development, supported by adequate infrastructure, legal framework, and enabling business environment.””

We have listed below the top business sectors in Kuwait, which will assist you in gaining perspective on businesses in the Kuwait market.

Oil & Gas Industry

The Oil & Gas sector in Kuwait accounts for about 40 per cent of its gross domestic product and about 92 per cent of export revenues. Kuwait Petroleum Corporation (KPC) is a state-owned entity which produces about 7% of the world’s total crude oil. The company covers all the aspects of the hydrocarbon industry – onshore and offshore upstream exploration through production and refining, marketing, retailing, petrochemicals & marine transportation. KPC is one the world’s most reliable suppliers of energy and had planned to achieve crude oil production capacities in Kuwait of 4 million barrels per day by 2020.

Banking & Financial Services Industry

The banking industry in Kuwait led is by the retail business, where personal loans & financings consist of 40% of total services, that is the largest share of sectors. The financial services industry contributes to flourishing the Kuwait’s economy. Kuwait is one of the largest countries amongst other Gulf Cooperation Council (GCC) countries & the National Bank of Kuwait is amidst the largest banks of the region. The country’s economy is favored by the rise in entrepreneurs through their startups & SMES in Kuwait, which helped in minimizing economical effects when the price of oil is dropped.

IT Industry

The demand for websites & mobile application are on the rise as sectors like retailers & bankers whose primary source of income are consumers, have been digitally transforming their services & creating efficient digitalized solutions in Kuwait. Amongst the MENA region, Kuwait ranked the highest on key IT & mobile infrastructure services with internet penetration at 99% & mobile penetration at 174% in 2020. The youth of Kuwait play a huge role in influencing the various sectors in turning their services digital & supporting the demand for emerging technologies & software. The Kuwait Government has introduced several e-services for the citizens & residents of Kuwait. At Bexit, we have a number of mobile applications for providing solutions to different market sectors.

Media & Marketing Industry

The key drivers of the media & marketing industry are digital media marketing, digital content creation, App stores & online portals. Kuwait consists of a demographic with high literacy rates which reflects on the high demand for information provided across various media. The opportunities of digital marketing are high since the internet penetration, mobile penetration & televised penetration are high. Digital marketing is cost effective & thus encourages advertisers to utilize these mediums to target niche audiences. Digital content creation drives the Kuwait market with digital tools for services like e-books, applications, websites & blogs, graphics, images & videos. Many businesses in Kuwait are opting for online presence which targets a larger customer base through online stores & portals.

Healthcare Industry

With the rise in population of Kuwait over the last few years, the demand for healthcare facilities are on the rise. Obstetrics, gynecology, cardiology, are amongst the fastest growing specialties in the healthcare sector in Kuwait. In addition, hospitals & clinics for lifestyle requirements create several openings for establishment. Since Kuwait has one of the highest rates of obesity, there has been an increase in demand for lifestyle clinics, which help individuals in improving their health & lifestyle. Private hospitals offer various specialty services, thus creating inbound medical opportunities & reducing overseas treatments.

Conclusion

These top sectors play an important role on the economy, including the Exits and Acquisitions that take place. Here at Bexit.co, our objective is to make it easier for investors looking for the next business opportunity and business owners that decide to exit their business by placing their listing in a reliable platform like Bexit.