Hello and welcome to "M&A, Murders, and Accusations: The Good, the Bad, and the Ugly of Selling Your Business." We delve into what you need to know and how not to kill the sale of your business. Now, here's our host, Rick J. Krebs, Mergers and Acquisitions Adviser.
Hello, everyone. This is Rick J. Krebs coming to you from the mountains of Heber City, UT, the M&A cowboy, exploring the nuances of mergers and acquisitions. Today, we're going to talk about something exciting - how to prepare for a buyer meeting. You might think, "Wow, that's pretty easy. I'll just wing it." The problem with business owners and entrepreneurs is that we're used to winging it. However, I want to discuss what you need to do to prepare mentally and physically for a buyer meeting.
So, the first thing to know when you're preparing is that you are no longer in the little leagues. You're no longer in T-ball. You are in the big leagues now. Let me give you an example. Well, I've got a friend whose brother played in the NFL. For those of you who have played in the NFL, you can relate to this. But, you know, I played sports in junior high, Little League, and high school. But what his brother told him was there was a huge jump from high school sports to collegiate. Then he went on and played in the NFL, and he said the first time he was in a scrimmage in the NFL, he got hit so hard it just shook him and it hurt. He said that there is a jump between high school and college, and there is a much bigger jump between college and the NFL because people are playing for money.
You know, when you look around and you, you look at the guy and you're like, "Well, I was All-American and I did this, and I did this," and the next guy did the same thing. You're like, every single person on this team is a superstar, and they're the best of the best in the country. The way they hit is so hard and so different than what he experienced in college, and then much, much more different than high school. So as you're going into this, selling your business or going into the buyer meeting, you need to know that this is the big leagues. This is big time. This is no more little T-ball hitting it off the tee. If you are not prepared when you step up to the plate as a batter and they throw that 90-mile-an-hour fastball at you, you won't know what hit you. I mean, you are going to be blown away.
Okay, the problem is this is the game of your life. This is selling your business. You probably never sold a business before. You don't know what you're doing, and you step up to the plate, and they throw that 90-mile-an-hour fastball past you, and you're just totally out of your league. That's what it's like. I use this example - it's like tea and crumpets with the cat and the mouse, and you're the mouse. You've got to make sure you don't get eaten by the cat. This is your baby. This is your retirement. This is for your family, your employees, and you've got to be on your A-game.
So, how do you prepare to do that? How do you prepare to have a good buyer meeting? I want to tell you a story of a meeting that we had one time with the buyer and the seller. In the meeting, the buyer discovered something that wasn't disclosed to him that should have been disclosed. And when that happens, the energy just left the room. Anytime a buyer finds out that something has not been disclosed that should have been, most of the time they leave, they just go away or if they're lied to. So, you've got to make sure that you've disclosed everything ahead of the meeting, everything that is important. It's okay to tell them they're big boys and girls, but things are better disclosed than they are discovered. You make sure that they go out and they know ahead of the meeting if there's something that they need to know. You don't want to just drop the bomb on them at the meeting. You want to have these conversations prior to the meeting.
One of the things as you plan for the meeting, you want to plan where you're going to sit. Sit across the table, or on our team, we're going to sit next to him. You want to talk about your strategy about where to sit. You also want to talk about your strategy for handling tough questions (zingers). We have another podcast on zingers. I want you to listen to that to learn how to answer questions effectively. These meetings often include dinner or some type of food. The food part of it is generally just social. Your family, your kids, and the buyers are looking to get to know you personally and to know they can trust you.
They want to know you personally, and they want to know they can trust you. If they have a dinner, and that's usually more social, and then sometimes you'll do a dinner at night, and then you'll do a big buyer meeting the next day. Sometimes it's all done in the same day. So the question is when and where do you do it? You want it at a location that is quiet, where you can have extra time and not be rushed. Sometimes restaurants are okay, but you want a private room for that restaurant. Pick a location that is nice and not too noisy, one that employees don't usually go to. You don't want a loud, noisy bar or something like that.
The other thing is, who buys? Generally, the sellers will want to offer to buy, but I see that buyers generally buy. Sellers definitely want to offer to buy because the buyers have bought tickets, they've flown in, they've spent time, and so it's a good show of good faith for the sellers to offer to buy.
Now, we've gone through location, who buys, and other recommendations. I also recommend that you practice answering the tough questions (zingers) with your M&A advisor. Think about the three toughest questions they're going to give you and practice how to answer them effectively. Keep your answers concise, use words like "we" and "our" to emphasize the team effort, and avoid saying "I" too much, which can make it sound like you built the whole thing yourself.
As you're answering the questions, use power words in your responses. For instance, say, "We appreciate" or "We're intrigued" rather than using simple language like "interested." Avoid saying something is simple, as it may diminish the value of your business. Instead, focus on how you've taken a complex process and made it manageable through proprietary technology and systems.
Next, let's talk about dress. Generally, these meetings are business casual. Slacks and a business coat are nice. Ties are not necessary, but dress appropriately for the type of business you're in. For instance, if it's a construction company, dressing casually, like jeans, is fine.
Now, body language is important during the meeting. Avoid folding your arms or hands in front of your face. Maintain open body language to appear approachable and confident. Being well-rested for the meeting is essential. I know it can be challenging with the excitement the night before, but aim for a good night's sleep to be at your best.
When asking questions to buyers, save the hard questions for the middle of the conversation. Don't lead with a hard question right away. Soften them up and gradually delve into the more challenging inquiries. Also, remember to express that it's not just about the money; it's about the partnership and what value this relationship brings.
Share pivotal stories that express your business culture and adaptability, but avoid sharing horror stories. Your goal is to leave them wanting more by keeping your answers short, direct, and concise. Make them earn the right to ask questions and engage thoughtfully during the meeting.
In closing, I want to say that if you follow these guidelines, you've got this. You can go into the meeting with confidence, and remember, liars or diers never lie. Be honest, be brief, and you'll have a great buyer meeting. Thank you for joining us on our show today. For more information, visit our website at www.bsalesgroup.com or email Rick directly at Rick@bsalesgroup.com.
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