CBB Negotiation Strategies & Deal Closing Flashcards

What is 'deal fatigue' and how can a broker help prevent it?

Answer: The tendency for long transactions to stall as parties lose enthusiasm; managed by maintaining momentum and clear timelines

Deal fatigue occurs when prolonged negotiations erode commitment; brokers prevent it by setting deadlines and maintaining regular communication.

Which closing technique involves summarizing agreed points to build momentum toward a final agreement?

Answer: The summary close

The summary close recaps all points of agreement to demonstrate progress and make final commitment feel like a natural next step.

What is the purpose of a 'price adjustment clause' in a purchase agreement?

Answer: To modify the purchase price based on actual financial performance or asset values at closing

Price adjustment clauses (e.g., working capital true-ups) ensure the final price reflects the business's actual condition at closing, not just at signing.

Why is it important for a broker to understand both parties' emotional motivations, not just financial ones?

Answer: Understanding motivations helps the broker craft solutions that satisfy both parties' underlying needs and close more deals

Sellers may prioritize legacy or employee welfare while buyers seek control or growth; addressing these emotional drivers unlocks creative deal structures.

What does 'splitting the difference' mean in deal negotiations?

Answer: Both parties agreeing to meet halfway between their respective positions

Splitting the difference is a compromise tactic where each party moves equally from their current position to reach a midpoint agreement.

When should a broker recommend walking away from a deal?

Answer: When the deal terms are so unfavorable to one party that closing would cause serious harm or legal liability

Brokers have a duty to their client, and some deals carry risks—financial, legal, or ethical—that make walking away the prudent recommendation.