What is the difference between interests and positions in a business sale negotiation?
Every negotiation has two layers:
- Positions: what each party says they want (a lower price, a larger escrow, a longer earnout)
- Interests: why they want it (certainty of close, protection against undisclosed liabilities, confidence in seller commitment after close)
Positions are zero-sum: if the buyer wants a lower price and the seller wants a higher one, one party wins and one loses. Interests are almost never directly opposed. When both sides understand what is driving each position, creative solutions almost always exist that satisfy the underlying interest without requiring either party to simply accept less.
Fisher and Ury made this distinction the centrepiece of principled negotiation in Getting to Yes. Harvard Program on Negotiation research confirms that interests-based negotiation consistently produces higher joint value than positional bargaining, and that experienced negotiators spend significantly more time surfacing underlying motivations than inexperienced ones.
What are the four buyer interests that Canadian business owners most consistently miss?
1. Certainty of close — buyers who have conducted significant due diligence, allocated capital and introduced the target to their investment committee have a strong organizational interest in completing the transaction; when they push for larger escrows or more protective reps and warranties, they are often expressing certainty-seeking rather than belief the business is worth less; structural assurances, insurance products or process commitments can satisfy this interest without a price reduction
2. Management continuity — in businesses where the owner is central to customer relationships or operational knowledge, the buyer's interest in retaining key people often drives positions that appear to be about price but are actually about risk; creative solutions include structured knowledge transfer programmes, retention arrangements and accelerated earnouts tied to relationship continuity metrics
3. Integration risk management — strategic acquirers and PE sponsors with existing portfolio companies have a strong interest in managing integration risk; positions about working capital normalization or reps and warranties exposure are frequently expressions of integration anxiety; demonstrating clean systems, documented processes and a strong second tier of management addresses the actual interest far more effectively than conceding on price
4. Reputational protection — particularly among family offices and strategic acquirers with significant brand equity; extensive reps and warranties may be primarily motivated by reputational consequences of acquiring a business with undisclosed problems; pre-transaction audits and specific insurance products can address this without unlimited indemnification exposure
Why do Canadian business owners default to positional bargaining?
Owners negotiating directly default to positional bargaining for understandable psychological reasons that are commercially costly:
- When a buyer challenges valuation, the owner's instinct is to defend the number rather than explore the interest behind the challenge
- When a buyer requests a larger escrow, the owner reads it as a statement about trust rather than a risk management preference
- When a buyer pushes for an earnout, the owner interprets it as a lack of confidence in the business rather than a legitimate desire to share upside risk
Each interpretation may have partial basis in reality. None is a complete picture. An owner who negotiates from the interpretation rather than the underlying interest consistently leaves value on the table.
What creative deal structures become available through interests-based negotiation?
Vendor take-back financing, equity rollovers, performance-based earnouts, staged closings, representations and warranty insurance, escrow alternatives and transition service arrangements can all satisfy buyer interests without requiring the seller to accept a lower headline price. The Pepperdine University Private Capital Markets Report consistently documents that lower-middle-market transactions structured with creative deal components achieve higher total consideration for sellers when properly designed.
Practical illustration: A buyer submits an LOI at 20 per cent below asking price with a 3-year earnout representing 30 per cent of total consideration. The positional response: counter at higher price, push back on earnout. The interests-based response begins with: what is driving the gap, and what is the earnout designed to address?
If the buyer cannot support the asking price at their required return threshold but believes the business has strong growth potential, the earnout is not a statement the business is worth less — it is an expression of interest in sharing upside not yet materialized. This opens creative responses: a modest price reduction in exchange for a shorter, better-defined earnout with a higher ceiling; representations about the growth pipeline; a working capital mechanism addressing the buyer's return threshold without touching headline valuation. None of these is available to a seller arguing the offer is too low. All are available once the interest behind the position is understood.
Key facts: interests vs. positions in Canadian business sales
Research foundation: Harvard PON — interests-based negotiation consistently produces higher joint value than positional bargaining
Experience gap: skilled negotiators spend significantly more time on interests discovery; novices argue positions
Four key buyer interests: certainty of close, management continuity, integration risk management, reputational protection
Creative structures enabled: vendor take-back financing, equity rollovers, performance earnouts, R&W insurance, staged closings
Research on creative deal structures: Pepperdine Private Capital Markets Report documents higher total consideration when creative components are properly designed
Advisor advantage: treats interests discovery as a structured analytical exercise across management presentations, Q&A sessions, diligence interactions and LOI negotiations
About the author
Karl E. Sigerist, Jr., ICD.D is President and CEO of The Shaughnessy Group and the author of Selling Your Canadian Business: A Step-by-Step Guide to Maximizing Value and Securing Your Legacy. This is article 4 of 8 in a series on negotiation strategies for Canadian business owners. Order at Amazon.ca.
Sources
Fisher, Ury and Patton. Getting to Yes. 3rd ed., Penguin Books, 2011.
Harvard Program on Negotiation. Interests in negotiation. pon.harvard.edu.
Malhotra, D. and Bazerman, M.H. Negotiation Genius. Bantam Books, 2007.
Pepperdine University Private Capital Markets Report 2024.
GF Data M&A Report 2023.
