If you’re considering buying a manufacturing business, here are six tips for meeting the Seller.
Whether you have manufacturing experience or not, there are certain rules of etiquette when meeting the Seller. As you speak with an owner and tour the facility, you will undoubtedly see things that you would change and/or do differently.
Many of those changes are how you will bring growth to the manufacturing business that you buy. You may be smarter and have better management and communication skills than the Seller. Don’t be a jackass. Rudeness is not a skill. It doesn’t matter how you think you can improve their business; it’s their business.
You might have an MBA from Harvard, but this guy may have built a business that supported families over the course of 50 years on only a high school education. Be respectful or you might not get to the next step. Here’s what manufacturing business owners want to hear from you when buying a manufacturing business:
Who Are You And What Qualifies You To Run The Business:
- First and foremost, who are you, and why do you want to acquire this type of business. One of our most common types of buyer in the current market are guys leaving corporate America. They seek acquisitions within the manufacturing sectors because of the potential return on investment. If you don’t have a manufacturing background, you better explain quickly how you’re not going to kill the Seller’s “child.”
- Even though we vetted you financially, the guy in the owner’s chair wants to hear from you that you can afford the acquisition. I’m not saying to not negotiate, of course, you will. But, if three buyers visited and you’re the only one that didn’t address financial capability, you’ll be working from a deficit. Let the Seller know you’re financially qualified and what your timeframe is.
Don't Waste The Seller's Time:
- Be respectful of the Seller’s time. He’s got a business to run and doesn’t want to see you sit there and try to figure out what you need to ask. Come prepared.
- If you see good things that maybe you didn’t expect. Be complimentary. You don’t lose your right to negotiate by saying something positive. Remember this may be more emotional than a financial decision for many. They need to LIKE you.
Skills & Confidence:
- Our clients have been fully educated on the fact that they will be required to work to transition the company to a buyer. However, they may lean more toward an experienced buyer whose hand they don’t have to hold for a long time. Be aware and be able to address this issue.
- Be trustworthy. Most transactions will require some form of Seller financing to ensure the owner’s cooperation with the transition. He’ll look for evidence of your character. One of our all-time favorite clients told a buyer to shove his full price offer “where the sun don’t shine.”The reason? The day after our initial meeting the Seller was contacted directly to see if he was interested in going around the professionals who were engaged to help him sell. Our client reasoned that he would never get the portion of the purchase price that was held in a note because of the buyer’s character. Within a month there were two other full price offers for our client to choose from. Trying to save a few bucks might lose you the deal - don’t be an ass!
Follow these 6 tips when meeting the Seller and you'll make yourself stand out from other buyers! Learn more about buying a Manufacturing Business Here.