30 Jun Top Tips for Achieving a High Buyer Success Rate
Greg Kells, President of Sunbelt Business Brokers, provided a wealth of actionable information and tips for listeners in his recent BBP webinar. In this article, we’ll dive in and explore more of his key ideas for how you can take your “buyer game” to a bold new level. It is important to note that Kells enjoys a highly impressive 98% buyer success rate.
Buyers and sellers have a lot of emotion wrapped up in their respective decisions. One of the many jobs a business broker or M&A advisor has is to understand this fact and proceed accordingly. Buyers usually have some degree of fear when it comes to buying a business. If you can tackle the factors that can generate fear and uncertainty point by point, it can go a long way in alleviating that fear.
Kells points out that while lawyers are obviously necessary in the process of buying and selling a business, they can also be a source of fear for your clients. He noted, “I don’t know that I’ve ever had a lawyer who actually recommended a deal to his client. My goal with lawyers is to get them to be neutral.” You will be well served to remember that there can be many people who are actively influencing a buyer, ranging from their family members to professional advisors. It would benefit you to know who else is influencing the buyer’s decision to buy.
Early in the process, you absolutely must work to educate the buyer about the process and the scope of your work. Before meeting with buyers, Mr. Kells provides them with a book he has written. His view is that this saves him a great deal of time, as the buyer can simply read over a range of key points instead of having Kells sit in person and convey information.
Here is a list of items that would be beneficial for you to educate your buyers about in advance:
- Explain what your role entails and that your work is specifically designed to help save them time and match them with the right business.
- Make sure buyers understand the role of their advisors. Advisors are advisors, not decision makers. The buyer is the decision maker.
- Warn buyers that they will hear negative information from their advisors.
- Review what a non-binding offer is and why it is important.
- Explain the purpose of due diligence and that they have the right to walk away.
- Make sure buyers understand that time delays are very common.
- Convey the fact that lawyers are slow at generating drafts and will often argue with one another.
- Help buyers understand that lawyers can kill a deal. Kells recommends reviewing everything before sending it to the next lawyer. He advises against sending documents directly between lawyers.
- The lending process is very slow, and lenders will often ask for more and more information.
- Seller financing will likely be part of the equation.
- Buyers should understand that they will need to sign an NDA and treat the non-disclosure process seriously.
- Buyers should understand that you will be requiring a good deal of information, including financial information and a resume.
As Kells states, “My goal is to find a business that works for them and will achieve their goals…I focus on what they will enjoy…and work to understand their risk tolerance…as well as the other restraints on them.” A key aspect of his approach is that once he has found the right business for the buyer, he walks them through why the business is a good investment. Proving that a business is a great business is one of the simplest steps that a business broker can take in reducing the “fear factor” in the process.