“Nice to meet you” – what business sellers can expect from a first meeting with a prospective buyer of your business
The first meeting has two purposes. Think dating and you’re on the right road.
Primarily it is a 'get to know you' session for both parties. In other words, do we think we can work together going forward and are the vibes about the other person positive, something known as chemistry.
Whilst the primary function is played out over the course of the meeting, the second purpose is to provide an in-depth discussion about your business, with the buyer leading the way.
The potential buyer will have had a lot of information on paper, such as the IM, accounts, notes from phone conversations with the agent and probably a lengthy and comprehensive trail of emails covering a variety of questions.
Therefore this meeting is to give the buyer an opportunity to ask everything they want direct to the owner and hear it all 'from the horse’s mouth', which is important because you pick up on so much by the nuance of how things are said, and equally or more importantly from what is not being said, as well as the bod language tell-tale signs.
The questions should not just be one way - the seller also should 'interrogate' the buyer - what is your experience, what interests you about my business, how would you look after the staff, what are your plans for the future, how does this business fit in with your current business portfolio, how will you manage it and most importantly - can you afford it?
In other words, you are asking why you should have confidence to sell your life's work to this stranger or corporate body.
Affordability should already have been covered by the agent before the meeting, but it helps to have the buyer restate all of this direct to the seller to ensure that the story remains the same and to be sure that everybody is singing from the same hymn sheet.
This meeting will normally take place in a neutral location, such as a hotel lounge, for several reasons. Firstly, owners don't want strangers traipsing around their premises in front of all the employees, secondly a site visit comes only when there is serious commitment from the potential buyer so we know they are not wasting time, and thirdly, there is too much valuable information that can be learned from a site visit that you do not want to give too soon.
It is normal for a first meeting to last up to two hours although that will depend on initial impressions and how well prepared the buyer is. Meetings can always be cut short if they are not going well, but over-running and being under pressure of time when things are going swimmingly is best avoided.
The agent, if present, will normally not talk too much, other than to keep things moving and interject with helpful comments. He or she may clarify things if they are being misunderstood, as well as emphasise the good selling points. The agent does not have to be there and there are plenty of business owners out there who have the experience and confidence to look after themselves without a minder present.
The end of the meeting normally sees the usual pleasantries, exchange of business cards and agreement as to who will communicate with whom and when.
A common question is whether to plan all meetings in one day or spread them out? This depends whether the inquiries are coming in dribs and drabs and so they will have to be spread out, whether the seller can afford a whole day out of the office, and finally whether you have the stamina. These meetings are mentally exhausting, and you need to be on top form.
An agent knows within 15 minutes whether the buyer is as serious as they made out or whether the deal can work. A good agent who feels that a meeting is not going well will tactfully bring it to a close and avoid wasting any more of anybody’s time.
Remember that you are not obliged to answer every question put to you, but it is equally important not to lie. It is perfectly legitimate to respond that you need to check a fact or that at the moment you are not comfortable to give an answer. Serious and seasoned buyers will not be fazed, an in fact it lets them know you are not a pushover.
Probably the most important question for both parties often ends up as “the elephant in the room” – PRICE.
Although the indicative price has usually been stated in the advertisement, one party wants to get it down and the other wants to get it up. However, they do not want this difference to drive them apart at the point they are trying to establish a rapport. There will be plenty of time for price maneuvering later on.
The seller should definitely not discuss price although when and how the buyer may, if at all, stray into this price could be very telling. It may be a crass attempt to browbeat the seller early on or it could be mentioned respectfully as the meeting is wrapping up as a legitimate means of trying to establish how fixated the seller is on the headline price.
Of course, if the price is “offers invited” then the buyer might well bring it up to get a feel for where they need to be in order to succeed.
Whatever is said by the buyer about price, the seller must politely state that anything to do with price has to be discussed with the broker and that they are instructed not to say anything other than that.