“You never get a second chance to make a first impression.”

As a Business Broker with years of experience guiding business owners through this life cycle of divestiture, as well as being a former business owner who has acquired businesses, and who has personally used a Business Broker to sell my company, the following are critical elements in understanding and appreciating the experience and psychology behind properly positioning a business and its owner – for and during that first critical buyer/seller meeting.

Oftentimes the divestiture process can end right here, at that first meeting. Make the most from your first impression.

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“You never get a second chance to make a first impression.” It’s an expression that really hits home during this experience of presenting your company to a possible buyer. The owner’s every move, facial expression, tenor and tone of voice, as well as showcasing the business and actual facility – and yes, each and every moment of the selling experience – is being judged by the buyer. Make this opportunity count! Always be professional and have your company look that way.

 

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Some critical elements that help make that first impression – a successful one.

1.) The Financials & Their Appearance:

The quality, depth and presentation of the financial information is critical to impressing any buyer. He/she is buying the opportunity to make money. Prepare your financial statements to answer each possible buyer question, and most importantly – clearly document how your business generates cash flow!

A good Business Broker will know how to produce and present this information. Potential buyer’s will notice the professionalism in the financial’s presentation and will become during this period more trusting, easier to speak with, and most importantly – the overall presentation will comfort a buyer if considering acquisition financing.

Inaccurate, inconsistent or unreliable numbers will negatively impact and shape any buyer’s first impressions of a business.

Please know, this is the first step to killing any deal. If a substantial portion of the financial information is not available, is late, not up to date or just plain sloppy – this will only create uneasiness for both buyers and bankers. And remember, the business is being marketed to both a buyer and ultimately to a buyer’s banker.

Keep the financial information simple, straight forward and accurate. Do not overstate! If anything, understate when not sure.

Much better a buyer is positively surprised by information discovered – rather than disappointed by a wild, over statement of the financial picture or something disappointing left out.

Sooner or later, in the beginning of a transaction or during the “due diligence” phase, an experienced buyer, or one of his/her advisors (accountant, lawyer, banker, business advisor) will usually discover all the information, good and bad. Utilize your intermediary and accountant and work very closely in putting this presentation together.

 

2.) A Buyer’s Questions During That First Meeting:

Typically, a buyer will ask – how does your company make money? What is your cash flow? From where is your revenue generated? By percentage, what are the revenue break-downs from the business’s products and services? Who are your customers? How do you market to them and what are the results? How big a role does the owner play in generating the revenue? Who are the key employees? Are there leases? How much per month? How long are existing lease obligations? These are usually the first questions a buyer asks or is thinking about during that first meeting. Beforehand, have your answers thoughtfully prepared and financial statements and supporting documents organized for presentation. .

Oh.., and be prepared for that very first buyer question – which is always –

Why do you want to sell… now?

The information and answers for all of these questions need to be prepared, available and presented in such a way that is easy to see, communicate and comprehend.

 

3.) Facility Appearance – Curb Appeal:

Your business facility should say with the first look – professional, organized and well run. What does the site line from the street say when approaching the front door? What does the lobby/reception say? Is it clean, bright? Does it make you feel welcome and interested in going in? Get rid of the clutter, clean the floors, maybe a fresh coat of paint on the walls.

Appealing cosmetics may not automatically engender a higher transaction price, but it certainly will aid in making your business easier to sell.

How does your inventory look? A dusty appearance may mean dated product (and not what you have it on the books for). How clean are the restrooms, the hallways, the working spaces?

A buyer doesn’t just buy the money a business produces, he/she would like to acquire a professional and effective culture that sustains the business for both today and into the future!

Walk through your company and view it like an outsider seeing it for the first time. Would you want to buy into this?

 

4.) Supporting Documents and General Business Information:

Start your preparation for a buyer’s information requests as soon as possible. That means – today. The buyer will be observing how this critical information is saved and produced. Impressions will be forming about you and the business’s professionalism. The speed, thoroughness and visual presentation all affect the buyer’s impressions and how they might weigh risk and derive price.

Try and assemble everything before you get to far down the road. Perhaps a folder containing hard copies of essential documents or digitally have this information available in one convenient place. It later will ease frustration and make your life more manageable when entering the “Due Diligence” phase.

In addition to the last 3 – 5 years of company tax returns, P and L’s and balance sheets, the gathering of the following items will help this along:

  • List of assets in the business
  • Accounts receivable and payable in detail
  • Customer Lists (never reveal customer names unless absolutely necessary and only at the very end before closing – use descriptions – not a name) What customers produce, how much revenue.
  • List of patents, proprietary information, trade marks etc.
  • Inventory turnover and the aging 
  • Lists of Equipment, dates when acquired, and furnishings included with the sale
  • Supplier and Vendor Contracts and Agreements
  • Equipment leases and property leases with the dating, terms, yearly expense and contact information
  • Franchise agreements if applicable
  • Sales history and product sales
  • Marketing initiatives and results
  • Employee payrolls
  • Key employees and employee evaluations (never have the buyer meet employees until after the deal is done – if possible), contracts and any incentive agreements
  • Shareholder agreements and corporate filings
  • Any registrations with Federal, State or local government

 

5.) Patience and Preparation:

 Understand most deals will die during the first meeting, as a buyer forms his impressions, or during the due diligence process when a buyer discovers the “real” business.

Patience, cannot stress that enough – patience, and a willingness to work through this emotionally demanding journey will be invaluable. Prepare yourself for that first meeting. A good Intermediary will know how to prepare, guide and counsel you on what to and what NOT to say during this experience.

As you navigate the transaction process, more and more information will be requested, frustration with one or more of the many participants may emerge, just be prepared with the information and relax and work through the process. It will be hard on your nerves and become an emotional roller-coaster, but in the end preparation and patience will make it easier on you and – yes – the deal will get done!

 

6.) Your Own, Personal “Curb Appeal”:

Tenor, tone, comportment – critical to a first impression!!!

When presenting yourself and your company to a potential buyer, be honest and straightforward in all your conversations. Do not hide the negatives. A good buyer will understand and accept explanations upfront. A buyer just doesn’t want to find a negative on their own. A disappointing discovery creates an unnecessary atmosphere of doubt and at that point you may, if not probably, have lost a buyer.

If the company recently loses a key employee, a customer, or contract – be candid and upfront. A good explanation and your subsequent course of action will resonate with the buyer. Every business has problems, good buyers know this, and when the owner reveals both strengths and weaknesses buyers begin to build trust and will empathize and work with the seller during the process.

In your discussions with a potential buyer understand that the tenor and tone of your voice, (and if meeting personally with a buyer) even the comportment of your body, is being evaluated by the buyer. Understand, how you present yourself can be critical to any continued discussions.

 

As each owner experiences this adventure of selling their business, keep these four important thoughts in mind:

  • From the first meeting, always be candid and honest when discussing your business with a buyer. Honest with everything including its weaknesses and failures, not just the successes.
  • Second, view the entire process of selling your business through the eyes of a buyer.
  • Third, the business you are selling is the one you have today, not the one you had years ago.
  • And finally you, – Mr./Ms. Owner – from the very first “buyer/seller meeting”, will be the most consequential salesman and representative for your company. Oftentimes, even if you have a business broker, you as owner will be “the closer”. Why? Because they are buying your professional life’s work. Your company!