We recently had a situation where our client, the buyer, was pursuing the acquisition of one of their suppliers. The buyer expected the process to be relatively easy because he and the seller had known each other for years.
However, when he tried to speak to the owner about possibly selling his company, he was mysteriously unavailable. The buyer couldn’t figure out why his calls weren’t being answered.
From our client’s perspective, he had a good working relationship with the owner and they had been doing business together for a number of years. We did a little research and discovered that in actuality the seller had been holding a grudge. The buyer had no idea why the owner was upset or that there were any problems at all!
By digging deeper we were able to get to the root of the issue. The seller was concerned that our client had never really been serious about acquiring his company. He didn’t want to spend all the time and effort going down that path just to be left at the altar.
Fortunately, because we discovered the issue, we were able to communicate that our client was indeed serious about pursuing the acquisition, and we were able to massage wounded egos.
What’s to be learned from this? There are many things that an owner of a company, especially one that is “not-for-sale”, will feel uncomfortable communicating to the buyer. Many owners are going through the M&A process for the first time and may simply feel nonplussed or overwhelmed. They may have questions that they are afraid to ask the person who could later become their boss.
This is one of the reasons why having a third party advisor can be beneficial. An owner may be more comfortable speaking more candidly with an outside party. At the same time the advisor acts as a buffer between the buyer and the seller, handling any hurt feelings or frustrations in order to preserve the relationship.
In order for a deal to be successful, both buyer and seller must be aligned on the terms and the strategic value of the deal. Creating that alignment requires tact, skill and sometimes a little outside help.