One of the most important aspects of successfully
selling a business is defining the likely buyers –
describing who they are and how to find them.
Creating an “avatar” will help you narrow the “field
of fire” when you start your marketing. It allows you
to take a rifle, rather than shot gun approach to the
marketing of that business.
But for this discussion, when we say, “know your
buyer”, we’re using that term in the micro sense;
i.e., referring to the importance of knowing who –
specifically – you’re dealing with when working with a
potential buyer. Because if you’re not dealing with the
right person, you’re very likely to waste your time.
Not knowing who your buyer actually is can set you
up for some rude surprises. This is particularly true
when working with a strategic buyer.
When someone shows up and says they represent
such-and-such-a-business and they are interested in
exploring the possibility of acquiring the company
you’re representing, it tends to get the juices flowing.
Brokers envision a successful sale. Owners envision a
major payday. We tend to want to “get this ball rolling”
and see what kind of deal can be struck. But is the
person that approached you the right one to be talking
to? Is that person or the company they represent legit?
Maybe. But maybe not.
What if the person that calls, even though they may be
part of the business they claim to be representing, has
no authority to make a deal – in fact, has no authority
at all and is just snooping.
Negotiations, due diligence and more negotiations
take weeks in the best of cases – and very o�en
months. You could be spending an awful lot of time
with this individual – and disclosing an awful lot of
information – only to discover that the acquisition
price you’ve been discussing has not even been
communicated to the decision-makers!
You’ve got to ask: Who are the principals of the
business that is supposedly considering this
acquisition? Is there more than one decision maker?
Is the person you’re dealing with one of them? Have
you seen any documentation – such as a company
resolution - indicating the person you’re dealing with is
authorized to act on behalf of the acquiring company?
When you’re selling a business, it’s neither unmannerly
nor boorish to want to know what the structure of the
acquiring business is, who the decision-makers are and
what the decision-making process is before laying out
your client’s proverbial laundry.
You have to know how to balance your desire to get
the deal done with the caution necessary to protect
your client.
PROTECTING THE CLIENT
Protecting our client’s proprietary assets is a critical
aspect of what we do. That means knowing who you’re
disclosing it to.
For example, in almost any acquisition, one of the
most important issues for a buyer is the customer
list and the volume of business done with each. But
that data is also one of the most valuable and heavily