So the advisory side of our firm has agreed to help a family we know sell its business. It's a smaller deal size than we usually handle but it is a good business with very nice cash flow and the family has decided that rather than continue to run the business, they would like to finally cash out. In talking with potential acquirers, I've inevitably come across several kinds of buyers. You know, the usual suspects. The ones who try to see if the seller is in distress. The ones who try and grind you down at the last minute. The ones who try and figure out a way to take advantage of you. The seller is not and we have clearly conveyed that to suitors. A few potential acquirers have displayed extremely poor etiquette, namely delayed callbacks and delayed emails.
One suitor and I had a few phone conversations over a several week period and finally came to a verbal agreement. That buyer met us at a price that was not what we wanted but that the owner was nevertheless willing to accept. This suitor is already in the business and has already seen all the stores and offices and already knows the owner's business. I let him and his partners know that this is really a small deal for us and we really have no interest in playing games. We do bigger deals and we have seen every tactic in the book how to grind a seller down. I specifically let the acquirer know that in my world a verbal agreement is a legal agreement.
After checking with the owners that night, I left a voicemail for the buyer letting him know that the deal was good and that I would like him to fax the agreement or give me a call the next day. I specifically gave him three options to contact me as well as the times that he could. He could call me between 7 am and 10 pm. Email or fax me 24/7. Glad to finally get the deal over with, I awoke the next morning happy that I could finally clear my desk of this deal and move on. Low and behold, that day there was no call, no fax, no email.
I've said it before and I will say it again - BUSINESS ETIQUETTE CAN WIN AND LOSE YOU DEALS.
Suffice it to say, that company lost out on the deal. They called me a few days later to consummate the deal saying they had been slammed and finally got their contract together for us. I had no problems telling them that the deal was off.
Our firm's time is too valuable to be wasted on waiting for people or playing minor league ball. We want to play with the heavy hitters and when we say there is a green light to pull the trigger, we expect to see smoke in the air. We are now negotiating with some other buyers. These guys seem more with it and are also willing to pay a higher price.
I am pretty sure that the buyer wanted the deal but did not call back or fax an offer the next day because his company did not want to seem too eager. My suspicion is that they thought the deal was too good to be true and feared that we would play games and actually grind the price up on them rather than vice versa. I had told the person that the deal was done and that it was in the bag. All they had to do was execute. They didn't.
Lesson: EARLY INTO A TRANSACTION DO NOT ASSUME THE OTHER PARTY IS NOT TRUSTWORTHY.
Put your honest foot forward and expect the other party to do the same. If you go in with preconceived notions, it can get messy.
Lesson: IF YOU WANT TO GET A DEAL DONE, IT IS OK TO BE EAGER AND TO SHOW IT.
I am sure that it is taught somewhere in negotiating classes that you need to negotiate like you are playing poker. I agree that negotiations can be a ruthless time. But I'm not talking about negotiating, I'm talking about the period after negotiations have been complete. I am talking about closing deals. You want to do everything you can to close as fast as possible. The deal terms should already be good for both sides so that they are happy with the transaction in the first place. You don't want to do business with someone who because they see this eagerness wants to change the terms of the deal on you.
