Business owners sell up for a variety of reasons. New opportunities arising elsewhere, retirement and capitalisation can all play a part.
Whatever the reason, and whichever route to sale you chose, sellers will always reach the same daunting cornerstone.
The first meeting.
And it can often be make-or-break.
Both parties need to dig deeper to become satisfied with the potential sale. Sellers need to navigate their buyer’s agenda whilst building strong rapport and remaining respectful.
Because forming a positive connection is key to an easy negotiation stage. A client once confessed that worries about the initial meeting were a thing of nightmares.
But do you know what? You really don’t need to lose sleep over it.
Preparation is key and will help you get the most out of your first face-to-face with your potential buyer.
This blog breaks down that first meeting so that you can organise yourself ahead of time.
What To Expect From An Initial Meeting
If you’ve been following my recent blogs, you’ll know I have a strong preference for in-person initial meetings. This is because chat flows more freely when you’re physically sitting with one another, and body language can be incredibly helpful in reading the room.
General rapport-building and respectful interactions should be front and foremost at the start of the meeting. If your buyer has done their homework, which they should have, they will know not to launch straight into business talk.
It’s important to show the human side of a business deal.
Alongside building rapport, your buyer will have 3 main goals:
- To reassure you. Your buyer wants to make sure you trust them enough to hand over your business.
- To screen the deal. This is a huge financial risk for the buyer. They will be scoping you out to make sure the deal is right for them. Expect in-depth, clarifying questioning.
- To get the NDA. The buyer needs a Non-Disclosure Agreement to be able to access confidential information.
Preparing ahead of the meeting is hugely important in order to satisfy the buyer’s expectations.
It’s unfair, and a waste of time for both parties, to draw a buyer into the initial meeting without having personal clarity on the parameters of the sale.
Honesty Always Is The Best Policy
Expect the buyer to ask critical questions.
After signing an NDA, you must be prepared to answer honestly. It may be uncomfortable to voice shortcomings and undesirable aspects of the business you have worked hard to build, but don’t be tempted by untruths.
A considerate buyer will know that this is a very usual part of buying a business.
Misinformation is highly likely to hurt later down the line. Not only that, it increases the likelihood of renegotiation, meaning:
- The large chunk of time and effort used during the first negotiation stage is wasted
- There is a possibility of having to agree to less favourable terms
So, to avoid all of that, don’t play games. Be honest.
And if you simply don’t know, or you want to be sure, there is no shame in checking the facts before answering. Let the buyer know you want to be as upfront and precise as possible.
You would expect the same in their shoes, wouldn’t you?
If both buyer and seller take the time to prepare ahead of the meeting it can save time and aid in building a good relationship.
Plan to answer questions such as:
- What are your motivations to sell?
- What are you seeking from a sale? This covers their wants and needs beyond the financial element of the sale.
- What are your dealbreakers? Some business owners will only sell with the promise of the current logo or business name staying put, for example.
- What do you want to be included in the sale?
- How much do you think your business is worth?
- What are your expectations? Consider whether they are realistic. For example, all cash upfront is not, given the current climate.
Take the time to really break the questions down. Think about your answers. Then question yourself again until you’ve got down to the bones of it.
Preparing for the initial meeting means knowing exactly what you want out of this process. Because if you don’t know, how can your buyer meet your needs?
How can they walk away satisfied with the clarity and sincerity of the information they’ve been given?
Uncertainty, unwillingness and game-playing are simply asking for a stressful and drawn-out negotiation stage, if you get there at all.
Feeling overwhelmed? Worried about critical questioning?
Having bought and sold plenty of businesses for himself and with clients, Clive has a wealth of experience and can support you in becoming expertly prepared for your initial meeting.
Book a call with The Business Success Consultant today.