If there’s one thing that prospective buyers have to realize is that part of the process is to make offers, make offers, make offers. Obviously, one should not be reckless or ridiculous about them, but you have to get over the fear of putting pen to paper and presenting offers to sellers.
it’s the only way a buyer can be perceived as being serious.
it can be the only way for a buyer to access detailed company information.
That’s right; there may be times when a buyer has to submit an offer even BEFORE they have all of the desired financial information.
Sellers and often brokers can take the stance that they will only release certain confidential information once an accepted offer is in place. Personally, I find this practice to be completely absurd, but it does happen. As such, an offer is the only way to keep the ball rolling.
In this example however, one should always use a non-binding Letter of Intent (LOI) and not a full blown offer, simply to avoid spending a lot of money on an attorney at this stage until more data is available.
In addition, an offer is the only mechanism at times to “take a seller’s temperature” – meaning, to find out what they’re really thinking.
Don’t worry about insulting them – it’s part of the game.
The other point about offers is that it becomes an easier practice once you’ve made a few of them.
Offers serve to trigger an enhanced discussion with sellers and usually can accelerate a decision as to whether or not you want to pursue the business.
The entire process of buying a business can vary with each deal. Buyers have to realize they are dealing with personalities – lots of them; sellers, brokers, accountants, attorneys and family members. It can be an emotional time for everyone.
The key is gain familiarity with the process and to avoid wasting time which most buyers are prone to do, either by spending hours and hours just looking at listings or going back and forth with general discussions with the other side.
You have to roll up your sleeves and use your time productively and one of the best ways to do so is by getting offers on the table.