5: Meet the Seller(s)

Summary of the Process

A) Email us simple questions about the business
B) Request a call with the seller
C) Further demonstrate your qualifications
D) Request a second call or face-to-face meeting, if applicable

After reviewing the confidential information memorandum (CIM) and financials, you can email us simple questions or request a call with the seller to ask more complex questions. During the initial meetings, you should avoid asking for sensitive or proprietary information and discussing the price or terms. If you request a second call or meeting, we may request additional proof of your qualifications.

As a reminder, please do not contact any company employees, suppliers, or customers to keep the pending sale confidential.

A) Email Us Simple Questions About the Business

If you have straightforward questions about a business (see the examples below), feel free to email us.

Otherwise, if you have a large number of questions or any complex questions about a particular business, we suggest setting up a call with the seller. We don’t recommend emailing us a long list of questions or any questions that require a nuanced answer. Sending a long list of subjective questions that require elaborate answers can send the wrong message to the seller. They are typically difficult to answer in writing and tend to result in an incomplete or delayed response. Saving complex, subjective, or nuanced questions for a call saves time for both parties and reduces the risk of potential miscommunication.

Note that we can seldom provide any additional information on the business beyond what we’ve already provided in the CIM and financial statements, as our aim is always to write the CIM as comprehensively as possible and include all the relevant information regarding a business we represent. Therefore, if you have more than a few questions after reviewing the CIM and financials, we strongly recommend we set up a call with the seller to answer them.

Important—Note that we do not provide purchase price expectations for businesses without an asking price. Please do not contact us to schedule a call in the hopes that we will provide more information regarding the seller’s valuation expectations. We can’t provide any more information regarding the seller’s expectations beyond what is contained in the ‘Deal Structure Preferences’ (if available) in the CIM.

Following are examples of simple questions you can email us:

• When does the current lease expire?
• How many employees does the business currently have?
• What’s the breakdown of revenue by product for the last year?
• Is there any pending litigation we should be aware of?
• What percentage of revenue is generated from the top 10 customers?
• Does the business have any debt?

Following are examples of questions we suggest discussing on a call with the seller:

• What’s the typical sales cycle for the business?
• Can you provide more details on the current customer acquisition strategy?
• Can you clarify the year-over-year growth in revenue over the last three years?
• Can you confirm the current state of the business’s inventory levels and aging?
• How are the business’s supply chain and vendor relationships managed?
• How does the business acquire new customers, and what marketing strategies are in place?

B) Request a Call with the Seller

If you have additional questions after reviewing the CIM, we can arrange a call or virtual meeting with the seller. Note that in certain circumstances, we may request an indication of interest prior to granting a meeting with the seller.

Reminder – Prior to requesting a call with the seller, please make sure you have listened to the recorded Seller Interview (if available) that we produced for the business you’re interested in. The Seller Interview is a 30- to 60-minute professionally recorded and edited interview in which the seller tells the story of their business. It will help you understand the nuances of the business before speaking with them on a call. Not listening to the interview before arranging a call with the seller can send the wrong message to the seller and make you seem unprepared.

Recommended Agenda for the First Call with the Seller

• Your Background: We recommend first telling the seller about yourself, including your professional background, why you’re interested in their business, and any plans you may have for their company.
• Questions About the Business: After you introduced yourself and tell the seller your story, we suggest you ask the seller any questions you may have about their business.

Topics To Avoid During Meetings and Calls with the Seller

• Sensitive Information: Asking to see sensitive information, such as tax returns and bank statements
• Proprietary Information: Requesting disclosure of proprietary information or trade secrets
• Price and Terms: Discussing or attempting to negotiate aspects of the transaction, such as price or terms. Please contact us regarding all negotiations.

C) Further Demonstrate Your Qualifications

If you’d like to request a second call or a face-to-face meeting, we recommend the following:

• If you’re an individual buyer, you can speed up this process considerably by providing us with your credit report, resume or C.V., personal financial statements (we recommend using SBA’s Personal Financial Statement Form 413), a bank statement showing proof of the cash down payment, and any other relevant information.
• If you represent a search fund, you can speed up this process considerably by providing us with your credit report, resume or C.V., personal financial statements (we recommend using SBA’s Personal Financial Statement Form 413), a bank statement showing proof of the cash down payment, and any other relevant information. We recommend sharing any letters of support or information from any investors who will be involved in the process.
• If you represent a family office, we recommend providing any information you’re comfortable providing, with proof of your liquidity, at a minimum.
• If you represent a corporate acquirer (strategic buyer, PE firm, independent sponsor, etc.), share the details of your previous acquisitions. It may also be helpful to allow the seller to talk to the owners of companies you have acquired in the past.

 Regardless of the type of buyer you are, the earlier in the process you confirm your qualifications, the sooner sellers will likely reciprocate by disclosing information about their company.

If you have not already provided one, we may also request an indication of interest (IOI) prior to granting a second meeting.

D) Request a Second Call or Face-to-Face Meeting, if Applicable

If you remain interested, you may request a second call to ask any follow-up questions you have after your first meeting with the seller.

In certain circumstances, we can also arrange a time to meet the owner(s) face-to-face or a site tour. The parties find these face-to-face meetings are low-key “get to know you” meetings. Having third-party professional advisors attend isn’t ideal for facilitating open conversation, so we seldom participate in these meetings. When touring the business, ask as many questions as you want about the operations, provided they aren’t sensitive, such as names of customers.

Frequently Asked Questions

Can you disclose the seller’s price expectations if the business doesn’t have an asking price? No. For businesses without an asking price, the seller often doesn’t have specific expectations, and our aim is to sell the business to the highest bidder, the most attractive deal structure, or the best fit. Additionally, the purchase price can’t be considered in isolation, as the overall deal structure will impact the seller’s purchase price expectations. For example, a highly favorable deal structure (e.g., high down payment or high interest rate on a seller note) can justify a lower purchase price and vice versa. Additionally, many other factors can impact how attractive an offer may be to the seller, and all factors must be taken into account when evaluating an offer.

Can we talk with you before setting up a call with the seller? Yes, however, we can’t provide any additional information on the business (e.g., the seller’s price expectations if the business does not have an asking price) beyond what we’ve already provided you. Note that we can seldom provide any additional information on the business beyond what we’ve already provided in the CIM and financial statements, as our aim is always to write the CIM as comprehensively as possible and include all the relevant information regarding a business we represent. Therefore, if you have more than a few questions after reviewing the CIM and financials, we strongly recommend we set up a call for you with the seller to answer them.

How long does it take between completing the NDA and buyer profile and meeting the seller? The time frame depends on the seller’s availability to arrange a call or meeting and the number of buyers we’re currently negotiating with. Most meetings are arranged within one to two weeks. We do not recommend scheduling meetings within 72 hours of requesting a meeting due to the complexities of attempting to schedule a meeting with more than one party.

Can I tour the business? Tours may be arranged in certain circumstances. However, we recommend arranging a call with the seller prior to requesting a tour of their business.

Is a face-to-face meeting necessary? Face-to-face meetings are generally not necessary, although they can be helpful if the seller is considering multiple buyers and you’re requesting that the seller finance a portion of the sale. This allows the seller to meet you face-to-face and determine to what extent you may be a good fit.

Can I contact the landlord before I submit an offer to determine what terms they would offer in an option to renew the lease? No, you can only contact the landlord to determine the specifics of an option to renew after an LOI has been accepted.