You’ve probably heard this before from your spouse or partner. This is not a blog about your marriage or relationship. It’s about buying or selling a business.
There is a saying in getting a deal done: “Time kills deals”. I will add another, “Lack of communication kills deals.” The reason is that lack of communication leads to mis-communication. When a party in a deal doesn’t hear from the other party, they make assumptions. Those assumptions may be wrong. But, before they get corrected, the deal goes south. Here are some examples:
In most deals, there are negotiations back and forth. At some point, if one of the parties doesn’t respond in a timely manner, the other side may conclude that they’ve decided not to continue the negotiations and move on. When you are in a negotiation and need extra time to respond, let the other side know that and give them an expectation when you will respond. A good business broker will reach out to a party when they are not heard from to find out their interest. In this age of emails, it may be that the other party didn’t get your last email and is waiting for you to respond.
The need to communicate promptly affects dealmakers in other ways. As a business broker, many of the people we are working with are not experienced in buying or selling a business. There is always a question as to how serious they are about completing a deal. Communicating promptly shows interest just like responding slowly, and perhaps needing reminders to do so, shows lack of interest. The other party in the deal is very sensitive to this. They don’t want to waste their time with buyers or sellers who are not serious. People find the time to do what is important to them.
One of the most common areas where there is a need for communication is in the closing process. Typically, a buyer is doing due diligence, obtaining financing, obtaining a lease on the premises, and the attorneys are working on the purchase and sale agreement. Depending on the business, there may also be transfers of licensing, a franchise agreement, or other requirements. All of these take the work of more than one person. We, as business brokers, work to “quarterback” the process and make sure the parties are communicating and the deal is moving along to a closing.
Buying or selling a business is a stressful process on the buyer and seller. Everyone involved in the sale needs to keep this in mind and reach out to the other party (that word again, “communicate”) to eliminate problems before they get started. Obviously, if the parties have a cooperative working relationship and see that getting the sale closed benefits everyone, it is much more likely to go smoothly.
Having cooperative parties is likely to lead to a better transition after the closing. In most sales, the buyer relies on the seller for training and other transition help. A seller who likes the buyer is more likely to go the extra mile for the buyer. It is also likely that the seller may need the buyer’s cooperation after the sale in collecting receivables, helping to resolve a customer problem that may have begun when the seller owned the business, or the need for information. Good communication during the closing process will help to have that relationship. Having the parties socialize outside of a business setting, such as going out to dinner when the closing is imminent, and likely to occur, can help to further that relationship.
Buying and selling a business is about people and the relationship between them. Good communication is needed to have a good relationship and a good business sale.