One of the perks of my job is witnessing the full spectrum of deal making—from the good and bad, to the downright ugly. When you overlay this with the SME landscape, you get to observe and experience some truly remarkable things!
Here are my top 5 ways to piss off a seller (these have been real occurrences in deals):
My wife says that being late is denying the other person of their time, and this could not be truer in terms of an acquisition. In the world of SMEs, the seller is often the owner, balancing the demands of running their business, managing family responsibilities, and participating in the community, leaving them with little time to spare.
The easiest way to piss off a seller is to waste their time.
This might involve repeatedly asking for the same information, scheduling numerous meetings without making any real progress, or submitting stupidly low offers in the hope (or arrogance) that they would accept them.
In my experience, sellers want to get to know buyers, but they want that to happen in an appropriate way that respect each party’s time. The best interactions have been defined, respectful and appropriate to the deal stage.
Hot Tip: Buyers should clearly define their requirements from the seller at each stage—beginning with before the term sheet, continuing through due diligence, and extending to post-closure. This proactive approach ensures the seller and buy are on the same page from day one.
Remember your audience! If you are buying an SME and you want to really piss off a seller, then take your offer and dump it into a verbose, long winded, confusing and hard to read letter. Then send that letter to the SME owner and ask them to come back to you quickly.
I can guarantee you that the owner will read the email when they have time (which is rare) and then when they open it, they will look for 2 things: ‘How much?’ and ‘When?’
Once those items get their attention, they may look at other aspects such as who you are, who the “capital company” is and why you want to buy the business.
The negotiation in SME land does not happen on paper. It happens around tables, between handshakes and in person. It is 100% relational. Use the Term Sheet to inform the conversation rather than be the conversation.
Hot Tip: Use a Term Sheet not a NBIO or LOI. Clear, concise and uncomplicated. You can download the format I use below.
This is just rude! We recently had an experience where a buyer included terms which they knew to be non-negotiables and then wanted to change material terms which were fundamental to the granting of exclusivity without any alteration that would impact their side of the deal.
We are not talking sheep stations here; we are talking about transacting an SME business!
A quick way to piss off a seller is to include things that were never for sale and then to only see changes you make as appropriate. Whether you agree to changes proposed by the seller or not, at least acknowledge that BOTH parties can propose changes.
Sellers want a fair deal. Usually this means that the buyer and seller get a deal that they can live with but not the very best deal imaginable. Buyers should want to have a seller who is eager to make the transition a success rather than feeling like they’ve just gotten screwed by the buyer.
Hot Tip: Acknowledge changes and work through them respecting the position of the seller. Do not include items that were known non-negotiables. Do deals which feel like all parties are winning. You will have a much easier time of integration and transition.
This is the biggest frustration for me and a really easy way to kill any goodwill in a deal. Due Diligence is intended to assess the business and evaluate the commercial viability of what has been presented. It was not designed as a process to improve the business or adjust aspects that buyers do not like.
As a buyer, DD should not be used as a process to fix items. Recently we were involved in a deal where a buyer wanted to have items addressed during DD. Contracts amended, agreements executed, and processes implemented.
This is a hard no for sellers. The point is that there is a time and a place for these requests, and they are during the transaction documents phase. Condition precedents or condition subsequent are appropriate to have these items addressed.
Hot Tip: Use DD as intended. Evaluate the business and identify what needs to be addressed and when. Is it before the deal is completed or after? Is it material to the deal or not? Don’t ask sellers to do any more work than they need too.
Some may say this is self-serving, but it is incredibly frustrating. I get that buyers don’t want to spend money on deals that don’t proceed but I also don’t understand why you wouldn’t lean on the experience of others to speed up the evaluation and deal structuring process.
Recently, we were involved in a deal where the buyer failed to appoint a proper deal team due to budget constraints. This oversight cost this buyer the deal. If they had sought experienced advice earlier on, they would have seen the deal for what it was rather than focusing on items that were inconsequential. Eventually, the seller got so pissed off in relation to the delay, that they pulled the pin.
On the other hand, we had the complete opposite experience where the buyer quickly recognised the revenue and profit being generated and wanted to close quick. From signed term sheet, to settled transaction in 30 days. Full financial and legal due diligence as well as transaction documents. Seller and Buyer were both very happy.
Hot Tip: Get your deal team sorted early. Involve them in deal structuring (term sheet) as well as early DD. Either the deal works, or it doesn’t. Speed makes deals and lack of speed kills deals. No seller has ever said that moving with purpose through a deal was a bad thing.
There are some really easy ways to piss off a seller but also simple ways to quickly build solid trust with them.
Buyers, do what you say you’ll do, and when you'll do it.
Don’t waste time, don’t waffle -be respectful, only ask for what you really need and for goodness’ sake, get experienced advisors on your team at the beginning!
If you want to have a chat about an SME deal, then reach out. I live and breathe this world, acting for both sellers and buyers in this space.