<img alt="" src="https://secure.soma9vols.com/159708.png?trk_user=159708&amp;trk_tit=jsdisabled&amp;trk_ref=jsdisabled&amp;trk_loc=jsdisabled" height="0px" width="0px" style="display:none;">

Getting Buyers to Commit

Posted by Richard Ludlow

Fri, Jun 10, 2011 @01:09 PM

The following story is about a keen buyer and a motivated seller kept apart by past experiences and aggressive expectations. The names have been changed to protect the innocent and any similarity to a real life situation would be fiction, naturally.


 “Bert”, has built up a successful cash cow operation, but after 25 seasons he is ready to pack it in and move south. He has a fair amount of equipment, a good crew of guys and a solid reputation in his trading area. Bert is a great salesman, an expert at up-selling and always delivers more than he promises to his clients. His books are a little weak, but times have been good as any inspection of his lifestyle would confirm.


Our buyer, “Ernie”, is a solid hard working citizen, manages a contracting business, recently got caught on the wrong side of the real estate market, but muddled through rather well. Ernie knows his strengths and uses his professional contacts to compensate for any weaknesses.


Ernie can’t afford Bert’s business without a large seller’s note. Bert will only provide the note if he believes Ernie can succeed and is trustworthy. The two dance around each other for a couple of weeks, lunches, dinners, client visits and reach an “understanding” good enough for due diligence to start. They like each-other. That’s when all the problems start.


Ernie’s professionals can’t get their heads around the weak books and the business model (all new client s with no residual income). Bert is ready to deal $’s but Ernie isn’t talking, he’s studying up on the industry and running the numbers. Numbers mean nothing to Bert, he knows he’s successful and as long as he keeps selling he always will be. Bert expects Ernie to be like him. But Ernie’s a planner entering a new field. Ernie is putting his whole life savings on the line and can’t afford another bump in the road. Ernie develops analysis paralysis and goes silent. This causes Bert to do a complete 180 on Ernie, now viewed as untrustworthy with no people skills and likely to be a complete failure with the business.


The deal collapses. Ernie walks away and Bert says good riddance. Why? Perhaps it was a poor fit from the start? However, as soon as the talking (courtship) stopped, it all went south. As with any uptown girl--downtown boy relationship, special care needs to be taken that buyer & seller expectations are realistic and aligned. Both parties need a clear understanding of what they want and can expect from a fair transaction.

Topics: Selling your business, entrepreneurial opportunity