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Customising your offer to the desires of your buyer means you’ll profit more and sell faster. Every exit is a bit different, however one fact remains constant.
To be clear, I’m talking about selling the entirety of your assets/shares to a new owner, whether it be a competitor, someone new to the industry, someone local or someone that’s coming from afar. Although, this same principle applies when franchising, licensing, merging or even when going public.
Now, let’s narrow down our focus…
In this particular article we’re looking at knowing your buyer, how to start customizing your offer to draw in a faster deal and how to do it with less stress.
Your business broker or investment banker will likely tell you they’ll take care of everything. I’m here to suggest for you to be fully engaged in the process. Take charge of leading your broker or investment banker in the right directions and help them be successful too.
Listen more than you speak
First, you need information
Good solid, reliable, detailed information
- What does your prospective buyer value most in a company?
- What excited them to do diligence into yours
?
- What makes them feel cautious and hesitant to move forward?
The answers to these questions will likely be different for every prospect.
Find a business broker or investment banker who has a high emotional IQ, a high level of intelligence and a strong intuition. Let them build up the relationship between you and the prospective buyer. Give them instructions on the types of information you want to know to help close this deal.
“Allow other people to speak first; the important factor is not who talks… it’s who listens.”
Ilana Eberson
This is especially important because you can only pick up on what your buyer wants, what their fears, concerns, questions, desires, goals, and objectives are if you spend time listening.
Hopefully, you’ll be able to engage one-on-one, face-to-face with your prospect in a coffee or lunch chat, maybe even over a drink somewhere coordinated by your broker or investment banker. We want to position you in a way to build up trust and credibility with your prospect, in a very similar way to how you sell to the regular everyday clients of your company.
Naturally, before you initiate a marketing plan to generate new sales leads you take due time to cater the message to your market’s needs and wants. Right? So do the same thing when selling your business.
Talking your prospective buyer’s ear off isn’t going to convince them. Instead, listen to them, get to know them, and then ensure your business and your offering meets their needs better than any other company they may be looking to purchase.
Tips to get to know your buyer better
- Find a broker or investment banker who won’t impede communications between you and the buyer, we need communication to be strong and efficient.
- Treat each prospective buyer like a special client of your company. They are, afterall, about to make a very special purchase.
- Listen carefully to their unspoken words and wants, read between the lines of the information they provide to you.
- Respect their timelines and always stay ahead of them. If they ask a question, stop what you’re doing and provide a detailed answer as your top priority.
- Create a payment solution which fits their means. Put on your creative hat and find a solution which maximizes your sale price and minimizes your hassel.
Find a middle man you can trust
Your business broker or investment banker needs to be someone who can walk beside you and be your confidant. Not a know-it-all who wants to control the entire process.
Suggestion:
Treat the hiring process of a business broker or investment banker the same as when you hire a critically important new team member for your company like a COO, CTO or Controller. Do a thorough interview process, ask for references, grill them with well thought-out questions and perhaps most importantly, trust your gut!
Think about all the possible ways you could interact with your prospective buyer.
If you can organise a breakfast meeting where everyone gets together, do it! Share a meal, do coffee, do the conference calls and emails back and forth. I’ve even negotiated deals via texts.
Whichever you pick (or try them all!) invite your broker, your buyer and their broker too. Make this a collaborative process where everyone gets a good chance to feel genuinely comfortable with the deal.
It will work in your favour to make sure you’re really really punctual too, and ask a lot of questions in a calm, collected manner. Just like in any other sales situation, you don’t want to be overbearing. Don’t be the fire hose that shoots water in their face. You want to naturally get to know them better and make a deal that’s a win-win for everyone.
“Every sale of a company should be a win-win for everyone involved. Including your team and suppliers.“
A great broker is going to help make sure the sale of a company is a win for you, for them, for your soon-to-be former employees, clients
That means you also need to take some time to consider everyone in this equation.
How is your team going to be treated?
What’s going to happen with long-term suppliers?
What’s going to happen with your competitors and your reputation? Will that be perceived as a scary move or a strategic one?
How about this: “We are so happy we are bringing in a new owner with extra strengths to add on to the existing foundation of this company.”
You want to discuss these important points in the sale negotiation process and make this transition smooth, low-risk, and successful for everyone involved, not just you.
Treat your buyer like another clie nt
When you do business with your everyday clients, you make sure to understand what they want. What are their pains, emotionally and physically?
I’m going to suggest that there’s no difference between that and selling your company to a new owner.
Selling is not about giving something to someone they don’t want. That’s not professional selling.
What IS professional selling is helping people solve a problem in the most efficient way possible with something you’re offering. If someone wants to buy a good business, you’re going to help them buy a good business, your business.
The prerequisite here is that you do have a good business, it’s worth buying (meaning profitable and sustainable). I’m assuming that your business is doing very well. So now, let’s find the right person you can help by selling it to them.
Example:
I know it can get a little intimidating selling your entire company, especially if it’s your first time. When you do it for the first time – when you do anything for the first time – it’s scary as hell! Like riding a bike, maybe you’ll fall over and get scraped up a bit, that’s inevitable. It’s part of the learning process and next time, you can do it better.
It won’t be perfect, no matter how many times you sell a business.
Lesson #1:
Take one solid step forward every day and never stop. Perfection doesn’t exist. There’s a certain point where you just need to move forward. You’ll get too caught up in the mental mess of perfection and lose focus on the bigger picture – doing what needs to be done in order to successfully sell.
Of course, as you treat any other client, you treat your buyer. This means you’re listening to understand.
Know your buyer’s needs
We want to get to know who’s buying your company so you can position it properly to suit what it is they’re looking for.
I sold a company to someone from a different geographical area. They wanted something that was a little more automated, sustainable, and had good growth potential. I knew this because I spent some time getting to know them personally to figure out what it is they wanted.
Lesson #2:
If someone comes to you saying they want to buy an apple, give them a frickin’ apple!
So just do that! Fulfill the needs of your buyer just like you would fulfil the needs of your clients.
I made sure the company was automated to a large degree, and also made sure the financials were organised and proper. He had a lot of questions, and I answered them quickly and stayed responsive.
Show that you care, that you’re invested in the company, and promise to stick around if they need you or promise to leave immediately if they don’t want you there.
Take the time to know what it is that the prospective buyer wants, make a list of things they mention. Even better, Google some questions you could ask.
Think of it as a friendly, happy, subliminal interview.
Some details to figure out when talking to your prospective buyer
- What’s going on in their personal life, what’s their real motivation?
- Have they been involved in this industry before, how do they feel about this industry?
- What excites them most about getting into this particular industry?
- What are their biggest fears about buying a company in general?
- What drew them to your company?
- What do they not like about your company that they’ve seen already?
- Can you help them
strategise and address the concerns they have about your company?
- Is there a particular fear about employees leaving that you can help resolve?
- Is there a benefit for you staying on with the company for a certain amount of time after selling?
Of course, another important question you need to ask your buyer is what their timeline looks like.
Know your buyer’s timeline
If you’re going to sell your company, then let’s get it sold!
I met this guy once who ran a really cool DJ studio. He had all the bells and whistle, flashing lights, black lights, mcee gear or anything needed to light up a stage particularly for big parties and DJ-ing. He had a huge warehouse filled with cool stuff!
I went in there one day and was buying equipment for my basement. I was filling it up with all these lights and sound activated flashes, getting the proper speakers, the right wiring. I was like a little kid in a candy store buying all this stuff and ended up talking to the owner, and this continued as I went back a few times.
On my last visit, he started speaking a little more honestly and ended up sharing that he was shutting his company down. One of his competitors had gotten so big and so efficient he couldn’t compete anymore.
He told me he was kicking himself because he could have sold his company for a million dollars before.
He had physically received that offer to sell his company to someone for 1 million and he didn’t take it because he didn’t know how to do it.
All because he was… intimidated.
He didn’t believe then that it would be to his benefit.
Now, three years later he was shutting his doors for $0. Zilch. Nothing. He was closing the doors and that was the end of story, no more million dollars for him.
“If you want a happy ending, that depends of course, on where you stop your story.“
Orson Welles
There are plenty of more prominent examples, like how Kodak Cameras disappeared.
Blockbuster, where did they go? Then there was Snapple when Quaker bought them up, right
If you feel like it’s time to make an exit strategy and if exiting aligns with your personal goals right now, call me. Let’s do a complimentary session on your objectives and where your company stands.
Know your buyer’s payment plan and budget
When it comes to price, are they going all cash or going for a loan?
If they’re thinking of taking out a loan, maybe you want to help them with a better takeback situation or a promissory note on that SPA (sales purchase agreement). Maybe you can work on a payment that is to their benefit and gets you more money.
Example #1:
Let’s say you’re willing to sell for $5 million but would prefer $7 million. Maybe you can hit that $7 mil mark if you throw in an extended payment plan that helps the buyer make the purchase. You can get that extra bit of money by helping the buyer feel more comfortable about clients staying on longer term. Maybe you can even attach some of the revenue you’re going to receive from them to the performance of a certain customer that has been important in the past and that you feel confident is going to stay with them in the future.
“In
– Chester Karrassbusiness you don’t get what you deserve; you get what you negotiate.”
Example #2:
It doesn’t have to be all cash upfront. Think about when you buy a car, a lot of people buy it at 0% down and you pay full price. When you go in with cash, usually you can get a discount. If you want to get a little more money for your company, think about incorporating some sort of a payment plan that helps you maximise what you can get out of the deal
The point I’m trying to make is this:
Every company sale is unique just as every buyer is unique
It’s important, and I highly suggest for you to spend as much time as you can to get to know that buyer as best as you can.
So when you’re talking to potential buyers you can let them know there are other serious offers and encourage them to add theirs. We’re not playing them against one another but we’re creating that feeling of scarcity.
Creating scarcity is about valuing what you have and acknowledging there’s only one company you have that’ll sell. It’s not going to go to multiple people, just one privileged buyer. Obviously your company is doing really well, you feel great about it, and it’s important. It’s worth a lot, right?
You have to go into this negotiation the same way you would any negotiation with a supplier, client, etc. You have a good, functioning, solid business and that’s exactly what they want. The right buyer will see that and pay well for it.
Remember this:
Selling your company is about more than just you.
The more successful it is for everyone involved, the more you’ll get out of it on a personal and professional level. You can look back on the exit and say, ‘hey, I did that!’
If you’re going to sell as your exit strategy, let’s talk and bounce ideas off one another. I’d love to know more about you and your business. Book a call with me and we’ll talk about what you’re focusing on right now.
