Buyers & Sellers Need to Socialize to Make Deals Happen

Most buyers and sellers wrongfully believe that relationships don't count in business purchase and sale transactions. They think that getting the best possible price and terms is the most important.

As a business broker, I have personally witnessed instances when misunderstandings and lack of communication were responsible for long delays and additional costs to transactions. Sometimes they have even caused promising deals to fall through. In other instances, deals that seemed impossible still happened because sellers and buyers cooperated fully, simply because they communicated, built trust, and earned respect for one another.

Buyers and sellers both underestimate the value of a personal relationship in the business sale process. Relationships are key. Businesses are often an owner's 'baby', and you wouldn't trust someone with your baby unless you have made a connection with them. In the electronic world that we live in today, people often forget that face to face interaction is, and will continue to be, the only way in which we as humans build trust with each other.

Most experienced deal makers understand that numbers, while very important, don't make deals happen. People do. When I started as a business broker, a major misconception that I had was that business owners were only concerned with the value they could extract for their business. The truth is quite the contrary. Most want a capable and trustworthy buyer that will continue to take care of their customers and employees.

This is why it is critical for both buyers and sellers to get to know each other and deal with the issues at hand face to face. As your business broker, I am committed to fostering the level of communication that is necessary to make deals move forward. Getting serious buyers and sellers together is a proven method to ease the emotion that comes with a business purchase and sale transaction.

There are two main reasons why relationships are deal drivers:

1. We trust people we know and like. The deal making process involves a lot of uncertainty for both buyers and sellers. Uncertainty means perception of risk. If this perception is beyond the risk tolerance threshold then no deal can be made. Human interaction and socializing reduce this perception of risk. For example, if a deal reaches a roadblock, as they often do, a proven way to move forward is to get everyone in a room together and bring the issues out in the open. This gives buyers and sellers the confidence that everything is out in the open and no one is trying to take advantage of the other. A person's intentions and personality become fully exposed during an in-person meeting. It isn't always as black and white as this, but the results of this interaction can either be a deal maker or a deal breaker. At the very least, it is no longer at a standstill.

2. Most people make decisions emotionally and then rationalize them. This is the nature of human beings. If the seller likes you personally, he/she will find reasons to sell you the business for a reasonable price and terms. We all tend to think that we don't act emotionally, but it is a learned skill to separate our heads from our hearts. As a business broker, I encourage and facilitate buyers and sellers to get around a table in a comfortable space and talk. This socialization is where the real issues get discussed and solved.

If you would like more information on what it’s like to sell a business, or a more in depth discussion on how Bridgepoint keeps deals flowing, please Contact Us online.