Selling a business is tough. Did you know that it takes an average of 18 calls to connect with a prospective buyer? And even then, according to the Marketing Rule of Seven, the buyer will still need to hear your offer at least seven times before they take any further action. It’s evident that selling a business is a numbers game and having one potential buyer simply just doesn’t guarantee that the deal will close. You could say, one buyer really equals no buyers. And here’s why.
Introducing the six difficult buyers you have to navigate your way around before finally landing the right buyer.
1. The ‘Almost’ Buyer
This type of buyer looks good on paper, your conversations are going well and everything checks out. You’re feeling good about this buyer and so have stopped looking for others. Then all of a sudden the ‘almost’ buyer stops being interested. No matter how much you’ve progressed in your discussions, so long as no formal steps have been taken – i.e. no declaration of intentions or purchase agreement have been signed – it’s not yet time to pop the champagne bottle.
2. The ‘Guy-Next-Door’ Buyer
Another type of buyer you cannot rely on is the ‘competitor’ buyer or the ‘business-next-door’ buyer. It may be tempting to offer your business to a rival company in the same industry with the hope that they’ll be the right buyer so things can move quickly. It might seem like the best exit strategy to approach them with a merger offer. What could possibly go wrong, right? Well, everything (and more!) if you don’t know what to look out for. If your exit strategy is to sell to a competitor, involve merger and acquisition experts like Sun Acquisitions to assist you with the technicalities.
3. The ‘Ghoster’ Buyer
When discussing matters of importance such as buying or selling a business 57% of C-level executives want to be contacted via phone instead of other electronic means. However, what do you do when a prospect who was once actively responding to all your emails and calls starts ignoring and shunning any correspondence from you? There is a term in the industry for buyers who have become unresponsive – ghosters. What should you do if a buyer is ghosting you? After 12 attempts at contact with no luck just consider it a dead-end and move on.
4. The ‘Troublesome’ Buyer
Asking questions as part of due diligence is to be expected from parties interested in buying the business. However, you need to be able to distinguish between a buyer carrying out detailed due diligence and one who is a mere skeptic and is trying to find fault with every little thing. The skeptic is the type of prospective buyer who may say things like, “I don’t trust that you’re telling us the full truth.” “Does your product/service really deliver/work as you claim?” They don’t appreciate your business and what it stands for. Tread carefully with skeptical buyers as they are unstable and may very well just pull out at the last minute.
5. The ‘Stingy’ Buyer
Depending on the reasons for selling the business you might have to negotiate the price you’re willing to settle for. With 6 in 10 buyers wanting to discuss pricing on the first call, it’s no wonder why 36% of salespeople say that closing the deal is the most challenging part of the sales process. However, don’t be bullied by buyers who object to your pricing. After taking into consideration different factors settle on a figure you believe is fair and have a lower cutoff amount in mind that you’re willing to accept if the right buyer happens to be a penny pincher.
6. The ‘Busy’ Buyer
When it comes to finding a buyer for your business, you have to exercise great patience. If you’re looking for an investor group to buy the business from you, you might have to resolve to one of the oldest marketing strategies in the industry – having your M&A advisor conduct a cold calling campaign. Is cold-calling effective? Statistics say that cold calling has a 2% success rate. And 3 out of 4 managers will take action from a cold call alone. However, the biggest downside with investors is their lack of availability. They are always so busy and yours isn’t the only business acquisition opportunity on the table. Don’t get taken in by the somewhat comforting, “We’ll get back to you when we are ready to buy.” Sellers, this isn’t an offer. So, you have to keep prospecting until you finally find the right buyer.
The Right Buyer
Identifying your ideal buyer and closing the deal can take anywhere from six months to 18 months (or more!). 26% of all forecasted deals, the leads that your M&A advisor nurtured carefully, and seemed as if they would merit fruit often become ‘no decisions’. This shouldn’t discourage you, however. The right buyer might even be someone unexpected. Keep prospecting and remember the following lessons on how to close a deal: learn how to time the deal – some days and times are just better than others (see the research here); have a clear process for selling and closing the deal; be persistent (sellers who make 12 contact attempts perform nearly 20% better than other sellers who stop at eight attempts), and finally just be patient.
Get specialist assistance whether buying or selling a business
Sun Acquisitions provides business advisory services for buyers and sellers. Our experienced team can help you prepare for a divestiture, conduct a diligence review, analyze target opportunities, and develop a targeted acquisition strategy. Get in touch with one of our advisors to learn more about how Sun Acquisitions can assist you during the buying and selling of a business.
Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.