Buying a business is never an easy process. It is time-consuming, emotionally draining, and capital-intensive, and the outcome remains uncertain until the ink is dry. All too often we have seen inexperienced buyers let promising deals slip through their fingers because they do not understand all of the important elements of driving a deal home.
The Calder team put our heads together to review and analyze what historically successful buyers have in common. Interestingly, common themes emerged that we will dive into below.
Keys to Success as a Business Buyer
Maintaining an Open Mind: Be open to pursuing sellers that match most of your criteria. Do not disqualify quickly, there will always be something to critique. View imperfections as areas for improvement. It is rare that you will find a business-for-sale that checks all of your boxes.
Meeting Face to Face: Meet the seller face-to-face as soon as possible. Talk to the seller about their goals and hopes in a transition. Find out what is important to them. Exude confidence and paint a picture of why you are the ideal buyer. Outline expectations post-transaction so the seller understands what is to come.
Involvement of Decision Makers: We understand that the ultimate decision-makers at strategic buyers, PE firms, and family offices delegate parts of the process to other team members, for example, initial prospect conversations, information requests, and analysis but when it comes time to drive the deal home, we have found that having the decision-makers directly involved greatly enhances the likelihood of a successful closing. No matter how good your analysts or M&A advisors are when it’s your skin in the game, it matters and it helps when you are involved in the closing process.
Keeping Momentum: From the first contact with a prospect to the execution of the purchase documents, a sense of urgency and momentum is critical. When facing a hurdle, for example, a difficult conversation or request, successful buyers double down and push harder, overcoming the urge to avoid discomfort or confrontation. Time kills deals. Deal fatigue is real. The obstacle is the way.
Adhering to a Timeline: A process needs to have deadlines or date goals and occasionally ultimatums. There needs to be an awareness of what the next step is and that someone is responsible for it. Uncertainty and long delays lead to negative, worst-case scenario thinking. Checklists, timelines, and a weekly call are simple things and they can work wonders.