3 Reasons initial Buyer/Seller Meetings Go Wrong
When your business is on the market the initial meeting with an interested buyer is the second chance you have to make a good impression.
The first impression comes from the marketing materials the buyer has reviewed. If that information excites them enough to learn more, they will want to begin a conversation with the owners. This first Buyer/Seller conversation is one that all sellers should be prepared for in advance -yet most aren’t! As a result, high quality potential buyers can be left with a bad impression of the business.
3 Reasons initial Buyer/Seller Meetings Go Wrong:
1. Talking about the past. Unprepared sellers may recklessly ramble on about the past and talk about the long hours, troublesome employees, industry complexities, and disastrous times they survived to get to the present day. Let’s be real, most owners have these times in their past. And truly, they are badges of honor because they’ve survived to tell the stories and are now ready to realize value for all their hard work. Buyers don’t care. And in fact, these stories can drive them away. Buyers are constantly assessing the risks that come with purchasing their business. Don’t be the gasoline that fuels their fears! Focus on where the business is today and how it is poised to grow into the future. Tip: Position your business as a great investment, not a difficult job that you no longer want.
2. Giving away too much of the right information. In the initial meeting buyers will have lots of questions, many of which should be answered – but only at the right time. Certainly, they will want to know why you are selling and a little of your business history. You should be ready to provide brief, high-level responses to these questions. However, you’ll want to avoid giving too much of your business success information to buyers early on. Even though your buyer should have signed a Non-Disclosure Agreement by this time, consider your business strategies and customer information as precious commodities that you don’t share early in the buyer conversations. For instance, giving a list of your Top 10 Customers or the recipe to your secret sauce for marketing shouldn’t happen until a buyer has presented you with a Letter of Intent to purchase. Tip: Collaborate with your broker to ensure you don’t reveal proprietary or protected business information too early.
3. Passing judgement about a buyer in the initial meeting. This is your first chance to get to know a buyer. During the conversation learn about their interests and motivation for choosing your business. Consider how their motivation aligns with your priorities and the needs of your business. However, avoid pre-judging your buyers and drawing conclusions about their fit to successfully own your business. You could prematurely cut out the best buyer by believing they can’t do what you do. Your buyer may not have your background, experience, or beliefs, yet they may be a perfect fit to buy you out and grow your business into the future. Tip: Rely on your broker to bring you qualified buyers and be open to the fact you won’t find a clone to buy your business.
Above all, don’t forget that when you are meeting with Buyers you are in marketing mode. It helps if you think and treat the buyer as you would a customer. If they say something you dislike or that makes you defensive, make a mental note to discuss with your Deal Team later, but don’t react negatively.