Tag Archives: Buyer

Beware of the buyer who attacks your advisor

If you sell a business, I warn you that buyers know that advisors play a very relevant role for the seller and there are some who will try to bypass them and speak directly to the company owner. This way, they manage to get as much information as they think useful or they even manage to pay less if the seller falls into the trap. The seller, being the final decision maker, cannot use the “fall back on higher authority” explained in the negotiation chapter and sometimes makes unnecessary or avoidable concessions under pressure from the buyer.

Each agreement comes with a set of implications and an experienced buyer sees things that you don’t see. By the time you realize, they will have already got a yes from you.

Once the conditions for the contract and a deadline to sign the contract had been set, the buyer asked to have a personal meeting alone with our client. In the meeting, the buyer asked to a 30% payment deferral and our client agreed. The next time we met with him he told us what had happened. When we asked him what guarantees they had given him for this payment he didn’t have an answer. He hadn’t gone into detail with the buyer and he soon realized what a mistake he had made not having his advisors with him when making concessions.

There are buyers who will try to tell the advisors that their client have told them such and such personally or will tell the client that the advisors have told something else in the hope of creating confusion, getting more information or benefitting more in the negotiation. For that reason, it is very important to organize and coordinate all messages.

In some cases a buyer tries to gain the trust of the client and encourages him to forget about his advisors, insisting that things will be smoother if they speak one on one. I recommend that you never fall into that trap. A trap set up without a doubt to negotiate with a less experienced persona in order to get a better price.

You are paying advisors, trust them and help them do their work.

You must insist that all information must be passed to the buyer via your advisors and that any questions they have can be answered by the advisors.

You must stay back and lead the process, letting your advisors get worn out during the negotiations and only turning to you if the negotiations get complicated and they need to use the method “fall back on higher authority”. That will be the moment for you to get into gear, cooling things down and solving conflicts.


Book: How to Maximize the price of my company

Who to sell your company to?

The time may come when you decide on changing projects or retiring, without a succession plan. You must prepare yourself and your company for one of the most important events of its existence: selling it to a third party.

During the sale of your company you´re risking the materialization of all the value generated through many years of hard work. Considerable wealth can be created or destroyed in this precious time. That´s why you must know all the techniques that help to maximize the sale price.

Many business executives wait for a buyer to appear someday, without stopping to think about the poor logic in selling the company to whoever comes first.

Is this the best buyer?

Is this who can pay the most?

It would be a huge coincidence if it was. It´s much more likely that it´s not. Also, by being the only buyers, they have substantial leverage.

Another mistake you can make is to allow a lawyer or a CPA to handle the sale of your company. Almost 70% of a deals value resides in finding buyers with the best strategic fit, who can pay more for your company. A lawyer or a CPA may find a buyer, but it´s unlikely that they´ll locate the best possible buyer since they´re not specialists at locating ideal buyers.

If you really want to maximize the sale value of your company, you, or the advisors you hire, must perform a rigorous search process to find the best buyers or investors: those who have better synergies with your company, who are stronger financially and who recognize the strategic value of your company (wherever they may be). Then you´ll have to make them compete to increase the price.

The key factor in maximizing your company´s price is getting the interest of powerful buyers, with great economic resources and strategic motivation to acquire your company.

The keys to price and how to put the finishing touches on a value and wealth creation process, for those who have taken the risk of entering the entrepreneurial world. It´s one of the most important and delicate moments in the life of a company and, hence, where there´s the greatest need to act the most professionally.

This article was written by Enrique Quemada, Chairman of ONEtoONE Corporate Finance Group