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Your Business: What Is Your Buyer Thinking?

Your Business: What Is Your Buyer Thinking?

In past blogs, we’ve talked about some of the psychological barriers that can interrupt your efforts to sell your business. Being a self-aware seller is important because it can improve the odds that your sales transaction will actually be completed.

However, in our many years of working with clients who sell their companies, we’ve learned that it’s equally important to be able to put yourself in your buyer’s shoes during a potential business sale. Why? If, during your “courting” and sale due-diligence process, you can anticipate what your potential buyer is thinking—what he/she is nervous about, in particular—you can often anticipate or respond quickly to those concerns. A calmer buyer is more likely to close a deal on terms that you’ll find favorable.

Also, qualified purchasers don’t come along every day. When you find a good one, it’s smart to hang on to him/her. Here’s how to improve your odds of doing so:

1. Be as transparent as possible. Many new buyers are worried about making a mistake when they buy a business. Anytime you withhold information or appear to be doing so, you may raise a red flag in a nervous buyer’s mind. Better to give them information as quickly as you can, and be upfront about any of your company’s shortcomings. They’ll learn that information in their due diligence anyway.

2. Be honest about past sales attempts. Did you try to sell your company before but failed or changed your mind? Again, honesty is the best policy. Buyers are much more understanding if they know your history before they learn about it from someone else. Perhaps the time or market conditions weren’t right for a previous sale. That doesn’t mean your current transaction will be a repeat performance.

3. Help them understand successors/ minority owners. Give buyers detailed information about your management team and any minority shareholders—including employment agreements, compensation plans, career history, their post-sale growth potential, etc.

These are the people your buyer will work with and who will help them retain clients over the long haul. It greatly increases buyer confidence to be familiar with their new team. Also, give your buyer direct access to your team—to ask questions, gauge their loyalty, let them explain your client/work process and more.

4. Sell the sale to your successors. It can help build goodwill on both sides if you spend some time building up the positive aspects of the sale to your team. Find ways to help staff get excited about new opportunities that might be open to them and their customers after the transition. Also, if you need to incentivize key managers or minority owners to stay on after the sale, do so.

5. Maintain deal momentum. It’s easy for nervous buyers to let a purchase option slip through their hands, simply due to inaction. They may stop returning calls and emails and essentially “disappear.”

The best offense is for you to keep the dealing moving along. Develop and meticulously follow a schedule. Postpone your own vacations and business trips, and work nights and weekends if necessary, to keep information and paperwork moving forward. The longer the deal takes to consummate, the less likely it is to actually close.

6. Remember: The buying process is stressful, too. You probably stand to earn a nice profit from your sale. However, your buyer is investing perhaps millions of dollars into a deal—and it’s possibly the first time they’ve ever done a merger or acquisition. If you can, try to be a bit empathetic if your buyer occasionally acts overly nervous.

Again, the more comfortable and confident you can help your potential buyer feel, the better your odds of closing a successful deal.

For more information about selling your company and evaluating the impact on your personal finances, don’t hesitate to contact your Wealth Advisor.

 

Important Disclosure Information

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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