Morgan & Westfield is not your average business broker. While traditional business brokers and business brokerage firms have always patterned their...
How to Respond to Buyer Inquiries
You are advertising your business. The ads are placed. You are ready to talk to buyers. Now what do you do when you talk to a buyer on the phone or get an email from the buyer?
So you have an email from a buyer. Now, what do you do?
Unfortunately, many buyers prefer to receive information through email. If you don’t send the buyer any information through email, you may miss out on those buyers. Whether or not these buyers are serious buyers, is a question frequently brought up by those very experienced in selling businesses. Some of these buyers are working at their day jobs and are secretly looking for a business during their work hours. They have no choice but to correspond through email. Other buyers prefer talking to someone on the telephone about the business.
What is the best approach?
The best approach, in my opinion, is to combine both approaches. Here is what I do when I receive a buyer inquiry through email:
- I immediately call the buyer and offer them the opportunity to talk on the phone. If they don’t pick up, I leave them a message with my phone number.
- I also send a one- to five-page teaser on the business along with a link to electronically sign an NDA to receive a full package of information on the business.
This approach is very simple and weeds out the buyers who are “tire kickers,” and are just looking. If they are interested, they will either return my call or electronically sign our NDA to receive more information.
What do I do if the buyer doesn’t return my call?
It’s pretty simple. I don’t do anything. I will usually call once, sometimes twice. Most buyers are very busy, and a second call may remind them to call you. Hunting the buyer down who doesn’t return your calls is a complete waste of time. I have posed as a buyer before to see how sellers and brokers responded to buyer inquiries and was amazed that about 80-90% did not even pick up the phone to call me. A full 50% didn’t even email me back.
The bottom line is that buying a business can be very frustrating and calling the buyer and emailing them a one- to five-page teaser on the business should be more than enough.
I have heard that other brokers send a full 30-page package on the business. Is this necessary?
In my opinion, this is completely unnecessary at this stage and may actually turn some buyers away. Let’s get real. We are all extremely busy in this world. Who is going to read a full 30-page report on the business at the first go-around?
These 30-page reports have value; however, they should be introduced at the right time. I believe in a phased release of information. If you go on a date for the first time, do you disclose everything upfront? I hope not. If you did, there would be nothing else for the other person to find out and the curiosity would be killed.
Selling a business is a process that I have studied, refined, streamlined and simplified over the last ten years. The bottom line is that it is a sales process that involves an understanding of psychology and negotiation.
What do I mean by “phased release”? Well…have you ever seen a trailer for a movie? How did they sell you on seeing the movie? Did they supply you with detailed qualitative information and a full 30-page report on the movie, or did they get you involve emotionally and create the desire in you to see the movie in a time span of two to three minutes?
I essentially use the same process. When the buyer initially inquires, I call them and send them a teaser profile on the business that highlights the unique attributes of the business. If they express further interest, then I request that they electronically sign our NDA. Notice that I make this process easy and simple for them. Remember, you are “selling” your business. It is a sales process and you should make it easy for the buyer to buy.
What should be included in the teaser profile?
I have actually seen sellers send over a raw equipment list on the business to potential buyers. Are you serious? Do you think this is going to motivate the buyer to buy the business? Buyers aren’t buying equipment, they are buying a business. We are talking about the “American Dream” here. Sell the opportunity; sell the unique attributes of the business. Talking about equipment is boring and is unlikely to get the buyer to make a move. You must incite the buyer’s emotions, and talking about equipment is unlikely to do so.
Why don’t you recommend asking the buyer to sign a non-disclosure agreement upfront?
What are we doing here? We are selling a business. The process shouldn’t be difficult for the buyer. The buyer is likely looking at 10-15 other businesses to buy. Can you imagine how frustrating it is for the buyer to have to sign an NDA for every business he wants information on? I have done this as a buyer before and it is very frustrating. The best method is to supply the buyer some information to see if they want to move forward before asking them to sign an NDA.
What is an electronic NDA?
We use a special service that allows the buyer to electronically sign our NDA online in a matter of 1-2 minutes. On July 2000, Bill Clinton signed the Electronic Signature in Global and National Commerce Act, which gives electronic signatures the same validity as their handwritten and hard copy counterparts. This service makes it easy for buyers to move forward at the same time as protecting us from “leaks” of information.
Ok, great. That is useful information. What should I do now?
Prepare either an email or a PDF document with interesting information and highlights on your business. Call the buyer to discuss your business and email the buyer this information on your business. Calling the buyer more than twice should be more than sufficient. If the buyer returns your call, then you may follow up more.