Negotiating the price point when buying a business requires finesse, especially when using a strategy like the low bid. The key is to balance an offer that works for you while maintaining a relationship that leaves both parties satisfied.

Use the following four strategies to master the art of strategic sub-offers in business acquisitions.

1. Understand sellers' overpricing due to excitement and optimism

Salespeople tend to overvalue their businesses, and it's important to recognize this as a common behavior rooted in both emotion and optimism. As in real estate, business owners often believe their company is worth more than the market would justify, driven by personal connection and theoretical future potential. They may also estimate based on potential revenue or expansion plans that have yet to materialize.

As a buyer, you should approach negotiations with the understanding that sellers naturally raise the price based on these emotions. When salespeople focus on future opportunities rather than just hard data, it creates a disconnect between their expectations and the realities of the current market.

This gives you the power to present a lower bid that is based on actual numbers and achievable results, helping you position a lower bid in a way that seems logical and fair.

Related: 10 questions to ask before buying a business

2. Discover hidden data during due diligence

There's always hidden data that needs to be uncovered during the due diligence process—information that doesn't come up in initial conversations but is essential to determining true business value. Some buyers wait until the letter of intent is issued to dive deep into the financials, but taking a proactive approach can help cement a stronger negotiating position earlier.

Look for financial breakdowns, ideally three years of monthly cash flows, and examine numbers beyond creative accounting or GAAP financials. This allows you to assess the real ability of the business to generate money. Analyzing current cash flow data will help you calculate a realistic multiple and adjust your offer based on true business performance.

With this understanding, you can safely justify a lower offer based on the underlying financial health of the business rather than surface-level numbers.

3. Leverage customer retention and turn it to your advantage

Customer retention and churn rates are key factors that can often be determined by salespeople to give a more optimistic picture of the business. If retention is low or duplication is high, sellers will often have explanations as to why this is so – perhaps they are citing consecutive events or special circumstances. Regardless of the reasoning, this presents an opportunity for you as a buyer.

Customer retention directly affects the company's future revenue stability, and high retention is a red flag for long-term profitability. Use this as a leverage point to negotiate a lower price. If you're faced with unclear explanations about the move or any inconsistencies in customer satisfaction metrics, it's a perfect opportunity to justify a strategic low bid.

The key is to frame your reduced offer as a reflection of the risks that low customer retention brings, ultimately protecting yourself from overpaying for volatile revenue streams.

Related: Make Your Next Negotiation a 'Win-Win'. 3 tips on how to do this.

4. Factor in industry and market risks

One area where sellers often overlook or underestimate risks is the state of their industry or broader market trends. Business owners may be oblivious to potential industry changes or, worse, try to hide these risks during negotiations. However, as a buyer, you should have a clear understanding of the short-term and long-term risks in the industry you are entering.

Take the example of Blockbuster, which was once a powerhouse before it was shut down by an industry shift to digital streaming. Retailers may be reluctant to admit that their industry is facing disruption, but these changes present a strong case for a lower price.

Conduct thorough research on the competitive landscape, emerging technologies and changing consumer behaviors within the industry. Then, use this knowledge to highlight potential risks to future profits, giving you additional leverage to lower the price. Being realistic about the future of the industry can lead to an offer that reflects its true long-term viability.

Related: When acquisition deals go wrong

By following these four strategies, you can safely use a strategic low bid without jeopardizing the deal. Understanding the seller's inflated expectations, uncovering hidden financial details, highlighting risks such as customer churn and leveraging market dynamics all contribute to a successful negotiation that benefits both parties. With the right balance of tact and persistence, you can secure a business purchase at a price that reflects its true value.