What Are You Looking For?

Remember Business Buyers, How You Behave During a Transaction is a Window Into How You Work


In a recent sale process, a potential buyer was at a management presentation with the CEO and management team of a company we were selling.  During that three hour meeting, the potential buyer managed to consistently talk over the CEO whenever she tried to answer a question.  He also hinted at the fact that he thought the selling company’s processes were inferior and then, right in front of the management team, said that he didn’t really want the management team.  As final icing on this disaster of a cake, he spent the final minutes of the meeting on his phone.

If you just looked at the numbers and the two companies’ websites, you would have thought this was one heck of a great deal.  The buyer was offering a full purchase price and the business combination would be powerful in existing and new markets.  I really believe that the buyer wanted – needed – this acquisition, but you would never know it based on their behavior.

Buyers must remember that management presentations and other interactions with a seller are not times for muscle flexing and combative posturing.  Assuming you want to buy the business and the people in the business are important to you (almost always the case), you need to treat all interactions with a seller like a job interview.  All communications should be respectful and used as an opportunity to market your business back to the seller.

Management presentations can be especially dangerous times for buyers.  Buyers need to use these meetings to learn a lot of information in a short period of time and there is a tremendous pressure not to miss anything crucial that will impact the final offer.  No matter how pressed for time, take a moment to address all of the seller’s management team at the meeting.  Explain why you are in the room and what the acquisition could do for your organization.  Take a moment to talk about your corporate culture and highlight where opportunities may exist for growth and personal development.  No matter your ultimate plans, do not use this meeting to talk about who you intend to fire or which plants you think you want to shut down.  And please, try to stay off your phone.

Prior to management presentations, an investment banker working with a seller will advise that client to use this time to evaluate the culture of the buyer.  Similar to assessing a potential dating partner, sellers should be paying attention to body language, tone, philosophies, goals, and mission statements and mixing those in with the purchase price and deal terms.  Weighing the hard numbers with softer characteristics is not an exact science, but it can be critically important for management teams that plan to stick around after a transaction is consummated.  These will be your co-workers post transaction, so try to evaluate what life will be like sitting next to them in the lunchroom.  If the valuation is so great that you are willing to overlook a buyer that lacks direction or good manners, at least you know what you’re getting into.

At the end of the management presentations, your investment banker will prepare a summary of all the bids.  A skilled transaction advisor will then add their knowledge of how those buyers typically behave during a transaction and will leave room for a discussion about culture and fit.  This combination of information is the best way to evaluate a potential buyer and prepare for an eventual transaction close.

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