Building Trust Is a Key to Winning the Deal
Occasionally, we run into prospective Buyers who think they have all the leverage and are condescending and combative throughout the acquisition process.
Other times, we have Buyers who need Sellers to commit to providing some financing via a seller note or a long transition period, but don’t feel they need to win the Seller over, that the Seller will do whatever it takes to get a deal.
These are somewhat extreme examples, but are used to emphasize the need for Buyers to build a trusting relationship with the Seller. Deals get made when there is respect, an understanding of each party’s goals, empathy and most importantly Trust. Buyers need to prove themselves worthy of buying the business in much the same way that Sellers need to prove the accuracy of the business’ financial statements. Here are a few reasons why:
It’s still a Seller’s market. There are more interested Buyers than there are quality businesses for sale.
Seller notes are often requested, but not guaranteed to be acceptable to the Seller. If a Buyer wants or needs the Seller to participate in the financing, they need to prove their ability to successfully operate the business in order to pay the Seller Note back. This is a loan, no different than working with the bank, and the Buyer should conduct themselves accordingly.
A number of years ago, we had a deal blow-up because the Seller didn’t think they would work beside the Buyer during the transition phase. Conversely, we’ve seen Seller choose a Buyer’s offer, even though it wasn’t the best price, because they felt more comfortable with one Buyer over the other.
Finally, don’t ever forget the emotional attachment many owners have their business. Even if there are some areas of the business that need work, show respect for the blood, sweat, risk and capital the owner put into the business. Nobody wants to hear their baby is ugly. A Buyer wouldn’t be interested in acquiring the business if there weren’t some positive attributes to the business. Issues of the business should be discussed, but not with a hammer or an “I’ve got you where I want you” attitude.
A Buyer needs to be prepared to prove themselves as a good candidate to the Seller, both with their business acumen and financial ability to get a deal done – even if it takes a little help from the Seller. I’m not suggesting the Buyer shouldn’t negotiate the best deal and terms possible, they should. However, I believe the bottom line is “Treat others the way you want to be treated” and you’ll improve your chances of winning the deal for the business you want.
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