Seller Remorse: The ConclusionOver the past month or so, I’ve written more than once about seller remorse. Specifically, I’ve described a deal in which, uncharacteristically, we were representing the buyer rather than the seller and how the deal was teetering on the brink of collapse; and that such teetering was the result of buyer remorse. Mistake #1: The seller hired a residential real estate agent to find a buyer for his business.
Given that residential real estate agents generally know nothing about what is arguably the most important aspect of successfully selling a business – how to determine its value – when we initially looked at it on behalf of our client, it appeared to be priced low relative to its value.
The Late Arrival of Talent
If you remember from the last post discussing this deal, this was when the seller finally called someone for some advice – an attorney – who promptly told the seller that he was letting his business go too cheaply. It was at this point that things began to get dicey. However, the seller had signed the documents agreeing to the reduced price so the was really very little the attorney could do other than try to bully our clients with threats of this and threats of that. Fortunately, all this acrimony went through us before it got to our clients and we were able to buttress our clients’ resolve. They decided to stay the course in the hope of getting the deal closed. Well, their faith paid off. It closed on Friday. Unfortunately for the seller, there’s a reasonable chance that he’ll be dealing with some level of seller remorse for some time.
The Bottom Line
Seller remorse, though relatively rare, is real. But there are several lessons to be learned from this affair that will help sellers avoid it. The first is that, when selling a business, the business’ owners have GOT to hire experienced talent to represent them. Last week’s post discussed the three ways to sell a business. The worst way is the DIY approach. But equally disastrous is hiring someone with the wrong training – whether it be a realtor, a dentist or the local high school gym teacher! The second is that business BUYERS are equally foolish to start the acquisition process without professional M&A representation. In this case, our clients were ready to pay substantially more for the business before we urged them to lower their offer. What they saved far outstripped our fee. If you have any questions, comments or feedback on this topic – or any topic related to business – I want to hear from you. Put them in the Comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast. I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week! Joe
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