This blog received a great comment from Layne Kasper of the M & A firm Kasper & Associates after last week’s article about the need for individuals to truly understand the owner when buying a business. Layne wrote:
“Too many prospective buyers have the attitude that the seller must convince them why they should buy the business. But they forget that it is their responsibility to convince the seller to want to sell it to them. That is especially vital if the buyer is hoping the seller will offer financing. By building the relationship, respecting the seller’s time and searching for ways to achieve both sides’ goals, buyers can engender tremendous goodwill with the seller and increase the odds of a successful transaction.”
I wholeheartedly agree with Layne’s perspective and want to elaborate a bit more.
If any buyer falls prey to a sales job by an owner, chances are they will end up making a terrible decision.
Buyers must keep in mind that nearly every individual who has listed their business for sale is on a sales mission. While they certainly want to be certain the right person buys it (and especially when offering financing), it is incumbent upon the buyer to not allow themselves to be sold. Rather, to diligently analyze the business and make the determination on their own whether or not to by.
More to Layne’s point, I have been preaching for years the need for buyers to impress the seller, and this goes beyond the possibility of negotiating seller financing. When a seller comes across a buyer who they fundamentally believe is the right person to buy the business, they (the seller) will go out of their way to make a deal happen and to structure terms that they likely would not offer other prospects.
Moreover, when a buyer impresses a seller, the dynamics of the deal and dialogue change exponentially. Discussions are generally more open and honest; the parties become more empathetic to one another and most importantly, the two sides work far more harmoniously to close a deal.
Of course plenty of deals get done when the parties may be more adversarial but that is neither the norm nor the ones that end up as what either party would classify as a good deal for both sides.
Buyers must also keep in mind that the seller of any decent business is going to be besieged with inquiries. Albeit most will be from unqualified individuals or the perennial “tire-kickers” but that is specifically why serious buyers have to stand out from the crowd. That is achieved by being properly prepared and educated, asking concise questions, exploring creative deal scenarios, focusing on the large issues at stake, having a give-and-take attitude during negotiations, and recognizing that a “perfect” business or deal doesn’t exist. It is a matter of getting hold of a business where the buyer can excel and both parties can live with the level of risk inherent with the deal terms.
Remember what Layne recommends and if anything, a buyer must put the emphasis on impressing the seller as that strategy will more often yield a deal that is advantageous to you.
Have a great week!