“I have found that the most attractive offers from buyers go beyond a simple dollar figure.” I could not agree more with this statement from Frank Williamson’s article on Axial. This concept that price is not the ultimate selling point is something we talk about a lot on the Successful Acquisitions Blog. We call it putting together the owner’s equation, that is identifying the motivators and drivers that will convince an owner to sell their company to you.
In the article, Williamson notes three other factors buyers should be aware of: autonomy, mastery, and purpose. Sellers often are running their own companies, so they have autonomy, they have mastered a skill or expertise through years of running their business, and they may have a sense of personal or professional purpose as an entrepreneur. Understanding how all these pieces and other nonfinancial factors fit together is crucial for putting together a compelling deal.
As a strategic buyer, understanding the owner’s equation is perhaps the most powerful tool in your M&A toolkit. Price is a binary factor – it’s either enough or it’s not. But the seller may have other pain points. What will happen to the company’s brand name after the deal goes through? Will the seller still have a job post-closing? How will the newly acquired company operate? What will happen to the seller’s family members who are employed at the company? Does the seller like you, the buyer?
These may seem like frivolous questions, but the way you answer them may be the reason why the owner does or doesn’t agree to a sale. Make sure you spend the time to understand the seller, their business, and motivators – both professional and personal – so you can build an attractive deal.
Learn more about building a compelling offer in our upcoming webinar on Successful Negotiation Tactics.
Date: June 20, 2019
Time: 1:00 PM EDT – 2:00 PM EDT