30 Apr Can a Prepared Seller Make a Difference?
As a business broker, to ensure you have a profitable sell-side practice, you strive to represent quality businesses with motivated sellers. What quantifies a quality business is a topic for another day and certainly will prompt a variety of definitions and discussion. The definition of a motivated seller can seem pretty cut and dry; once into presenting a buyer to your seller, you may discover otherwise. What exactly constitutes a motivated seller?
Usually owners become motivated when they are just plain burned out or have had a life event, maybe even a health scare or the death of a close friend or spouse. Something is prompting them to make a change as soon as possible. They may see life passing them by and want to participate while they are still healthy and have the desire and ability. Most often, a sense of urgency has been created by one or more of these events. But is this motivation or merely a reaction?
If you have been involved in the business brokerage industry for more than a few years, you likely have worked with one or two sellers whom you considered motivated. You might have presented them with a respectable offer from a qualified buyer and watched in amazement as they started to conjure roadblocks to a successful transaction. Frustration ensued, but still, you reminded them of all the reasons they had told you they wanted to sell. What went wrong? You did what they asked you to do, your job. You attempted to resolve each issue they raised, but another just appeared. Closing the transaction and keeping the buyer engaged is looking less probable every day. Deal fatigue and your fatigue are rapidly setting in, and it is now a race against the deal clock. Could this situation have been prevented?
Sometimes, what is causing hesitation from a seller has very little to do with the transaction itself. A seller may not even be consciously aware of what is troubling him or her. Here are just a few of the commonly unasked and unanswered questions that can easily derail a deal.
- How much money will he or she walk away with after all taxes and fees are paid?
- Will the sale net enough money to fund the rest of the owner’s life in the current or a better lifestyle? What if it doesn’t?
- How will the owner be able to replace all the perks the business has been paying for?
- How will the owner spend all that free time once the business is sold?
- How will the sale affect the owner’s social life, community standing, and how others perceive him or her?
- Will the owner still feel fulfilled and challenged?
- What will happen to the owner’s employees and customers?
I am not suggesting you become a psychologist, family counselor, life coach, or priest or that you even assist your clients in trying to answer these questions. These are real issues, though; if not properly addressed, they could make the difference between a payday for you and a lot of wasted time and effort. Wouldn’t you rather be spending your time more efficiently, more effectively, and making more money? Imagine if your sellers were actually prepared for their transaction and these questions had been adequately answered, removing the barriers and fears. Could you dramatically improve your close rate and have better transactions, more referrals, and more repeat business? Would your stress level decline if you did not have to deal with these issues? Could you concentrate on what you do best, market businesses, find buyers, negotiate deals, and close them?
This can be achieved without extra work, staff, cost, or effort on your part. Educated sellers are your best sellers. Empower them by recommending they learn the elements of a successful transition plan. In fact, positioning yourself in the marketplace as a true advocate for the seller with this unique offering can provide you an added advantage. This can better prepare them for their transaction and allows you to close more deals.
As trusted business advisors, and authors of the book “Cashing Out of Your Business: Your Last Great Deal“, Jane Johnson and Kathleen Richardson-Mauro will help you achieve your goals and maximize value when transitioning out of your business and into the next stage of your life. We’ve developed an effective, turnkey, 6-step business and transition planning process to ensure a smooth transition.
We’ve developed Business Transition Academy to provide business owners with a wealth of information to get them prepared for a business transition. Review our testimonials, read our business owner resources, and contact us today to learn how we can help you make informed decisions to achieve superior results.
