If you must sell

Modern Machine Shop, May, 1991 by George Spilka

The First Meeting

Within two to four months after proceeding, you should have the first meeting with the buyer. Remember, the buyer has most or all of his information from the MOI. Consequently, you should know it thoroughly and the impression that will have been created by it. Cultivate this impression during the first meeting and make it a positive experience. Stress the positive things about your company with a non-salesman type approach. Understand the negative aspects of your finn in detail because that is probably what a buyer will want to discuss.

A prudent buyer tries to assess all risks. You should develop a list of questions expected to be asked by a buyer. Determine the proper responses to these issues; responses that will cast a positive light on any situation while remaining credible.

The orchestration of the buyer's information gathering is very critical. Remember that the timing of divulging certain information can have a greater impact than the actual information that is presented. Things that negatively impact a transaction are often unnecessarily disclosed at a first meeting. Do not infer from this that untruths or half-truths should be told. Always respond honestly to a buyer's questions, but keep in mind there are only certain things that you want to voluntarily disclose at this point.

Remember that small things sometimes have a disproportionate affect on certain people. At this meeting, you do not want small things to sidetrack an otherwise interested buyer willing to pay a premium price. An important item is facility cosmetics. Make sure the facility is in prime condition at the time of the first visit. Also, make sure your employees are working diligently.

Realize that your intimate knowledge of the company gives you a clearer perception of its operations than a buyer will have. A prospective buyer can misconstrue things during the first visit due to his lack of familiarity. Here is an example:

A client's firm had an extremely large facility that was underutilized. One of its major customers had a space shortage, so the customer stored items that were produced and paid for in my client's facility. When the first potential buyer decided not to proceed, he indicated that it was based upon the apparent variance between inventory on hand and the inventory presented in the MOI. We clarified this and the prospect's interest was renewed, although he was eventually outbid by another buyer. It is your responsibility to assure that a similar situation does not happen to you.

A business is a dynamic organism. It might have changed since the MOI was developed. Keep your prospective buyers up to date with present business conditions. Emphasize any positive developments that have occurred to increase the company's attractiveness to a buyer. Remember, you are selling at this point, albeit discreetly and subtly.

To recap, two primary objectives to strive for during the acquisition process are establishment of credibility and acquisition of control. To have control you must know the potential buyer, his needs, and methods of operation. You must investigate him as thoroughly as he does you to determine whether his company is the right buyer for yours.