Photo by Matheus Bertelli
A key part of a business transaction that buyers need to know from the outset is the emotional gap between them and potential sellers. A seller has often built the business from the ground up and can answer the most minute of questions, as to why particular wording is used on a page of the website to why the office hours are what they are, to why the refund policy has been made the way it is. Those decisions were just a few of many that the seller made along the way. Whatever reason a seller is selling, he/she is emotionally invested.
This is not the case for the buyer. Buyers are looking for vehicles that match their goals. A buyer will look at a vehicle (a given business) and ask, will this allow me to:
- Reach my financial goals?
- Utilize my skill sets?
- Grow the business beyond where the seller has taken it?
- Have time with my family and friends?
- Construct an exit strategy when it’s my time to sell?
To get answers to those questions, buyers will have to dig, and sometimes that digging is taken personally by the seller. Remember, it’s his/her baby you’re poking! So be aware and be sensitive, or you might unnecessarily antagonize someone and get off on the wrong foot, which makes the rest of the journey that much harder.
Do Your Homework
To make this process more pleasant for everyone, you’re going to want to increase your leverage for negotiation, and that can start with what is publicly available on the Internet.
Social media is the low-hanging fruit here, with Facebook and LinkedIn profiles offering a lot of public information.
Some people’s profiles are private, but many are public and feature news stories, quotes, jokes, photos, and the requisite cat or dog videos we all are guilty of sharing. Find out what this person cares about and what his/her values are.
There’s a surprising number of people with limited or nonexistent LinkedIn profiles, but someone who is taking a business to market will likely have at least some activity on there. Look through as much of a profile as is publicly visible. You’ll want to see recommendations from previous colleagues or bosses, as well as educational backgrounds and any posts or articles shared.
You might understandably feel a bit odd doing this, and you might rightly say, “I wouldn’t do this sort of thing to check on the person next door.” That’s fine, but you’re not likely to be handing over hundreds of thousands of dollars to your neighbor or taking out an SBA loan under your name. Finding out publicly available information about your counterparty in a transaction isn’t just moral, it’s just due diligence. If it helps, just pretend you’re Tom Selleck in an episode of Magnum, P.I.
Position Properly
Now that you’ve done your homework and you’re aware of the emotional gap between you and the seller, you’ll be in a better position to hear out what the pain points are. Because you’ve put together a basic sketch on the sort of person the seller is: likes, dislikes, passions, projects, causes, etc., you’ll be able to better navigate the reasons given for selling, the amount of time for transition, what that transition will look like, etc.
Use your awareness of that emotional gap and the research you’ve done to make the process easier for you (and everyone else).
Looking for more ways to have a better posture and position when buying a business? We’ve got loads of knowledge to help. Contact us today.