When your business listing starts to attract interest, your broker’s job is to screen buyers for both suitability and to ensure they have the financial means to buy your company. When the pool of prospective buyers has been vetted, you’ll connect with them to get to know each other and decide whether both parties want to take the next step.
Here’s my advice to sellers on preparing for that first call:
Treat the call like a casual conversation over coffee. You don’t have to “sell” the business; the buyer is simply trying to see whether it is a good fit for their existing business or their acquisition goals. I’ve never seen a call that was unfriendly or full of challenges; if the buyer and seller don’t click on a personality level, the seller can always decide to move on to another buyer. So I advise sellers to relax and be themselves.
Prepare to share the story of your business. This is something every business owner should have, even if they’re not thinking about selling in the near future. Why you chose this business or this product, how you got started, and when you hit milestones. Lessons you learned along the way. The culture you’re creating in the company and the kind of customers you want to attract and build relationships with. You should be able to narrate the history of your business in less than five minutes.
Listen more than you talk and stay focused on what the buyer wants to know. If you’re speaking with a strategic buyer, someone with Private Equity backing, or someone who already owns companies in the industry, they’ll be focused mostly on whether the numbers work for them. Their questions and language will probably be very analytical and data-driven.
Lifestyle entrepreneurs might be more focused on company culture or what a typical day in the life of the company’s owner looks like. They may be more focused on the people side of the business. In either case, I recommend that an owner develop the skill of answering the buyer’s question and then pausing. Volunteering more information than they asked for, or moving on to another subject, won’t be effective, since the buyer will be working to absorb the information they requested. This is part of the “you don’t need to sell the business” advice from paragraph one.
The buyer is buying your talent in addition to your business. Be sure to talk about their expertise. In the alcohol business, the expertise of your master brewer or distiller is the key to your success. Your branding and marketing are also crucial to creating and maintaining loyal customers, so talk about how your team developed them and why. Talk about what you have learned from both your early adopters and your most loyal returning customers, and how you might have adapted your strategy based on their feedback.
It’s okay if you don’t have all the answers right now. As a broker, I try to prepare the seller for the kinds of questions the buyer will ask and how they communicate. Generally, they’ll have signed a Non-Disclosure Agreement and reviewed the detailed information in the Confidential Information Memorandum (CIM), so they’ll already have a good amount of information. But occasionally, a buyer will ask a financial or technical question that a seller might not know off the top of their head. It’s fine to say, “We’ll get back to you on that.” As you go through the diligence process, your broker will also be answering quite a few detailed questions and providing follow-up documentation.
Most introductory calls take around 30-40 minutes, and the conversation stays focused on the big picture. They’re an opportunity for both parties to decide if the company, product, and the personalities are a good fit. It might have been a while since you’ve been on a first date, but this meeting will be very similar (hopefully, with less angst).
