M&A Basics | Handling Buyer Meetings

Jacob Orosz Portrait
by Jacob Orosz (President of Morgan & Westfield)

Executive Summary

What happens after the buyer receives a confidential information memorandum (CIM) about a business?

Here’s the ideal sequence of steps in screening and meeting with a buyer:

  1. Buyer is pre-screened and signs a non-disclosure agreement (NDA)
  2. Buyer receives the CIM
  3. Buyer has a few questions that are answered on the phone
  4. Buyer and seller meet in person
  5. Additional phone calls or meetings are conducted until the buyer either makes an offer or decides not to pursue the purchase

When meeting with a potential buyer, keep in mind the Golden Rule: Treat others how you want to be treated. Specifically:

  • Be professional and respectful of their time and needs when making the arrangements; send them the message that you are professional and cooperative but not a pushover.
  • Be prepared. Be sure to have access to a computer and your CIM so that you can easily answer any questions they may have.
  • If you talk with the buyer on the phone or have a conference call scheduled, plan to talk in a quiet place.
  • Be sure to schedule enough time so you can hold the meeting without any distractions.

Let’s proceed …

Set a Meeting

Interested buyers usually prefer to ask a few specific questions on the phone before setting up a face-to-face meeting and seeing the business.

The goal of this phone call should be to set up a physical meeting because the chances of a successful deal improve once you get face-to-face with a buyer.

Set up a face-to-face meeting and then use this time to establish a trusting relationship. Asking the buyer to invest their time via a face-to-face meeting is also the most effective method for screening their motivation level.

Although it’s okay to answer a few questions before the meeting, it’s good practice to gently persuade the buyer to meet face to face to view the business and ask questions.

We only include two or three pictures in the CIM. Why do we do this? So we can leave some curiosity in the buyer’s mind and give them a reason to meet face to face and see the business.

Agenda for the Meeting

Immediately show your business to the buyer after a short get-to-know-each-other introduction.

At this point, the buyer usually hasn’t seen the business and is anxious to go on a tour, so don’t sit down and engage in small talk. The only thing on the buyer’s mind is seeing the business; don’t waste their time or yours. Show the business and have a discussion afterward.

Our clients find that the initial meetings with buyers are low-key and stress-free. The buyer wants to see your business and normally has a few questions that were not addressed in the CIM. This is why our CIM is designed to eliminate the basic questions every buyer asks.

Let the buyer ask as many questions as they want and then answer them in as clear and straightforward a manner as possible. You can get to know each other during the tour when you ask questions about the buyer and share information about yourself, too.

While showing the business, explain as much as you can about your business and its operations. Show pride in your business by adding interesting tidbits about its history. You can also add tips on how to grow the business, as well as what you like and dislike about your business.

Things to Avoid

  • Showing your tax returns and bank statements
  • Discussing financial aspects of the deal during the showing
  • Disclosing proprietary or trade secrets
  • Negotiating the purchase price
  • Discussing other terms of the transaction

The Importance of Honesty

Be honest. You will be more credible to the buyer if you are honest about your business’s downfalls or any dislikes you may have.

For instance, point out things the buyer might consider changing if they purchase your business, such as using updated marketing methods to promote the business better.

The Importance of Consistency

Thoroughly read your CIM to memorize the information it contains. Present information about your business consistently to buyers because any inconsistencies will be noticed. If a buyer doubts what you say because your claims are inconsistent, you’ll lose the sale.

For example, if you claim your markup is 35% in your CIM but later claim it is 40% when you meet with the buyer, the buyer will decide they need to validate all your claims and will take little of what you say at face value.

What’s the Next Step?

Don’t fill the buyer’s head with too much information at first. Keep the meeting the right length. Tell the buyer that if they are interested and willing to come back for a second meeting, you’ll show them more interesting things about your business.

If the buyer is intrigued, they will come back for another meeting. Some buyers make an offer after the first meeting, and some don’t. Don’t try to sell your business at the first meeting.

There’s no magic formula, but the right number of meetings is usually between one and four. The purpose of the first meeting is to set up the second meeting, and the purpose of the second meeting is to set up the third, and so on.

When Is It Time to Move On?

Is the buyer requesting a sixth or seventh meeting? In such cases, don’t waste your time; move on to the next interested buyer.

Remember, when selling a business, you’re making certain representations regarding your income and other factors. These representations aren’t verified before the buyer makes an offer, so five or six meetings should not be necessary. Save the in-depth investigation of your business until you’ve accepted an offer from the buyer. This time period for investigation and verification is called due diligence.

A few meetings should be enough for the buyer to decide whether they want to make an offer and move forward. If the buyer can’t make up their mind after the fourth or fifth meeting, then another meeting is unlikely to persuade them to move forward. At some point, the buyer must tackle their fears head-on and make the leap of faith. Additional information rarely appeases the buyer’s fears.


Is it necessary to meet the buyer face to face?

Yes, we highly recommend meeting the buyer face to face. Doing so allows you to vet the buyer and helps ensure the buyer is serious. There are far too many “internet/keyboard warriors” who love to look at businesses online and might have viewed dozens or more businesses in the last few years but lack the courage to make the leap. Meeting the buyer is part of the phased screening process and helps you determine if they are serious.

Why is my buyer requesting so much information and multiple meetings?

Fear is the biggest deal-killer for the sale of small businesses, specifically the universal fear of the unknown. Perhaps the buyer has never owned a business and is scared to take the leap. Your job is to make them feel comfortable. If you’re financing a portion of the sale, you can mention that you wouldn’t finance the sale if you didn’t have faith in your business. Explain to the buyer that if an offer is made, they will have plenty of time to perform their due diligence.