We were recently reminded how easy it is for a buyer to get overlooked in a sale process. We readily admit to having been frustrated on occasion with the responsiveness of sellers or their brokers. But we cannot recall an instance when we were not rewarded for our patient persistence. Nor are we aware of an instance when we were purposefully ignored. We must keep in mind that the very nature of the marketing efforts for small businesses can trigger responses that overwhelm even the most organized brokers. When we are able to do just that, it is easy to remain persistent, patient and respectful.
What’s Happening Behind the Scenes?
At a recent industry association event, two former business owners each described their experiences during the sale process. Despite the companies having similar enterprise values, their processes could not have been more different. One of the owners described a targeted process whereby his agent personally called about 40 potential buyers; and the other owner described a much broader approach with emails going to more than 700 buyers, as well as a post hitting the deal listing services.
Similarly, a broker recently told us about a deal for which he had just gone to market. In less than 24 hours, his firm had received more than 50 signed non-disclosure agreements from prospective buyers and sent out the company’s confidential information memorandum to every single one of them.
He offered that, in the midst of this near-chaos, the buyers who demonstrate “patient persistence” are frequently rewarded. It seems gratuitous to add that, given this level of competition, the buyers who fail to follow up, or worse, follow up with “nastygram” emails rarely get a positive response from the broker.
When we take the time to understand the nature of the process a broker is running and how fully time consuming it can be, it is easy for us to persist calmly and patiently. We also become keenly aware of our responsibility to screen businesses thoroughly and thoughtfully, pursuing only those which are in keeping with our investment theses and we absolutely want to own.
If you are aware of business owners who would like to sell their companies, please consider introducing them to Bootstrap Capital. We are keenly in tune with the issues business leaders face when they decide to sell their companies, as well as many other nuances of transacting in the lower middle market. We endeavor to demonstrate patient persistence at all times and commit to pursuing only those companies we honestly want to acquire. Bootstrap Capital is a patient counterparty and can be a constructive partner in helping sellers through the sale process.