When You’re Selling Your Business, How You Interact With Buyers Can Make or Break the Deal

by Oct 30, 2021

The following is adapted from The Exit-Strategy Playbook. 

Selling your business for maximum value is about far more than just showing prospective buyers your financials or highlighting what makes your company stand out from its competitors. How you act as an individual when engaging with the universe of potential buyers is also critical—and if you get it wrong, it can sink what might otherwise be a lucrative deal. 

Take it from me: your behavior plays a huge role in whether or not a buyer is willing to sign on the dotted line. To give you an example, I recently acted as an advisor to a private equity group interested in buying a company in an industry I had experience with. I attended the management meeting via video chat, and the buyers attended in person. I asked my questions, and they asked their questions. The management team did a great job of presenting. I thought highly of the team.  

Later that night, the private equity team took the management team to dinner. The founder of the company had several martinis during a three-hour dinner. He had trouble talking and walking, and he got up from dinner and drove home. 

Guess what? That killed the deal. The private equity team no longer cared about the business and how good it looked on paper. Here was a man who clearly had a problem and was willing to take the risk of being intoxicated and driving home. They offered to call him an Uber, and he refused. What financial buyer wants to take on that risk? 

There are multiple points in the sales process where you’ll interact with buyers. You will be part of the fireside chats, management meetings, and dinners associated with those meetings. Each of those interactions plays a different crucial role in the process, so understanding what’s expected will help you shine…and help you avoid making mistakes that might cause your buyers to back out. 

The Fireside Chat 

The fireside chat is probably the first opportunity for the buyer to interact with you directly. It’s generally just you and your investment banker talking to two or three people from the buyer side—the partner or mid-level executive and an analyst (for private equity or a financial buyer) or someone from the business development team and someone from finance or operations (for a strategic buyer). 

The fireside chat is where your elevator pitch comes out. You need to come across as confident but not arrogant. You need to be engaging and focused. You need to practice that pitch, prepare for likely questions, and be thoughtful, engaging, and passionate about your business and its story. 

Your banker will typically sit in on any meeting and kick you under the table (figuratively, electronically, or literally if you are together) or ask for a break if you are off track or struggling. They may even tee up some softballs when you miss a key point. The chat focuses on you and the company, so they can’t do it for you, but they will be there to coach you and help you. 

The Management Meeting 

During the management meeting (which generally lasts about four hours), you and your leadership team are on your feet, giving a presentation to the next potential owner. Public speaking skills are imperative. You need to be a leader, not just a manager. Managers are very effective at handling the affairs of an organization. They manage things. Leaders inspire people

Leaders who can engage an audience go so much further than someone who is simply a good manager. In order to get maximum value for your business, you need to inspire the buyer universe and tell a compelling story with conviction. 

I realize many people are scared of public speaking. They don’t like standing in front of a crowd. They freeze. But it’s worth its weight in gold to get over those fears and focus on telling a story with passion and conviction. 

You don’t have to be passionate about every aspect of your business. You just need to be passionate about your people and how you take care of them. You need to be passionate about taking care of your customers and how that leads to repeat business and organic growth. 

Master the Art of Public Speaking 

Since the management meeting is so important, if you’re bad at public speaking, now is the time to work through those fears and build your presentation skills. You can take classes or join a local Toastmasters group. No matter what route you go, your goal should be to develop the ability to articulate an engaging shared vision that others would line up to follow. 

There’s a rule of thumb in public speaking: every single slide in your presentation represents one hour of practice. If you have a 30-page presentation, it is worth your time to lock yourself up for 30 hours. Stand in front of a mirror and practice, practice, practice.  

Don’t just read from the text on the slides. Use them as eye candy to wow the crowd, but then expand on the three key points you’d like to make on each slide. If there are six points, the slide needs to be split into two. By hitting the main points consistently, you’ll do well, and each one will likely trigger three more subpoints.  

If you’re presenting to 15 different groups of buyers, it’s critical that you put in the time to practice. You absolutely have to ace it time after time. You want maximum value? You have to talk with passion about the business you built, how much it has grown, the team of people you’ve assembled, and how you’re going to continue to grow using their money over the next five years. You have to sell your buyers hope. Tell them you’re committed to this journey and there is nothing more important in life that you can do. 

The Social Dinner 

Assuming the management meeting and fireside chat went well, potential buyers will want to have a meal with you. There’s a reason for that: they want to catch you with your guard down when you’re not in the corporate boardroom, presentation room, or hotel meeting room. 

They want to see you in a social setting with a drink in your hand—if you’re so inclined—to see how you act and what else they can learn. Who else is in the process, and can they get any competitive indication of values others have offered?  

You are on display at all times, so do not let your guard down. Remember the guy I told you about earlier? Don’t be like him. If you have a tendency to go a little overboard, avoid the alcohol completely. Watch what you say, watch how you act, and conduct yourself in a way that your grandmother would be proud of. 

Remember, buyers want to see if there are any red flags they should take heed of. They know that social settings are hard for your investment banker to control. So, you need to be extra vigilant about controlling yourself, no matter how tempted you are to relax and cut loose. 

You are Always on Display 

When you get down to it, it seems pretty basic, right? And it is—but it’s also critical, and lots of people get it wrong. So, keep in mind that you are always on display in a sale process. Be mindful that anything you do or say can and will be used in the buyer’s internal value conversation.  

When you’re with prospective buyers, you are either racking up intangible points or giving them away. Industry multiples and competition determine price ranges, but these intangible points add potential value stretch and can help impact where you’ll fall in that range. 

For more advice on how to wow prospective buyers and get maximum value out of your business, you can find The Exit-Strategy Playbook on Amazon. 

President and CEO, bestselling author, trusted management consultant and acclaimed guest speaker, Adam Coffey is known for building high-performance cultures and driving transformative growth. Most recently, Coffey led CoolSys, a commercial refrigeration and HVAC service company. During his four-year tenure, CoolSys increased revenue by 239 percent and EBITDA by 376 percent while growing to more than 3,000 employees. In April 2019, Coffey led the company through a private equity sale from the Audax Group (Boston) to Ares Management (NYSE: ARES). A licensed general contractor, pilot, former GE executive, alumnus of the UCLA Anderson Executive Program, veteran of the U.S. Army, husband, and father of three, Coffey lives in Westlake, Texas.