I've spoken with many smart, credentialed, and sophisticated self-funded searchers out there over the last few years. Some struggle to get in the door. Others struggle to get their offers seriously considered. One thing I often point out to them is that those exact characteristics that got them to where they are might not be serving them in their current pursuit of finding and buying a small company in the messy world of main street business. For example, read your last non-binding LOI. Does it look like a lawyer wrote it? You might want to think more about how it's landing with the seller before you hit send.
Appearing sophisticated is often not in your best interest. Your job is not to impress them, it's to earn the trust necessary to go on a journey together. With many people, "impressing" them with an aura of status, prestige, and sophistication may be counterproductive to trust. Moreover, when it comes to communicating a serious offer, there's not a whole lot of benefit to having "lawyered" it when it's entirely non-binding anyway. Most business owners who've been around for a while will know that there's a general expectation that if you bring your lawyer, then I have to bring mine. People not used to engaging lawyers generally don't want to until they feel they must. It's scary. It's expensive. It's a major leap of commitment. If you bring a lawyer first, you might be pushing the deal too far too fast for them. Or, you might be asking them to just pick a different buyer. Oops.
We consider this dynamic in our strategy for both acquisitions and routine commercial contracts. Usually, we make our agreements as plainly non-legal as possible to avoid the legal department whenever possible. Plain language agreements are every bit as binding, albeit usually not as thorough or precise. When we do "go legal", we try to use fair and neutrally written templates, and share the source of the template with the counter-party. That act alone can help build trust, and can also greatly speed up transactions, and reduce legal expenses on both sides.
Of course this strategy can open up some liabilities you perhaps could have lopped off. Your agreements may not cover every imaginable situation like one written by an attorney with Big Law likely would have. You have to be willing to live with that. You might not win every fight. You might even lose some fights you could have won.
But, I'd posit that if you're kind, fair minded, and reasonable, things will work out just fine.
Connect to me here on Searchfunder if you want to chat about your self-funded search or email me at cubinvestments.com/searchers/. I appreciate hearing from people doing unique and thoughtful work in ETA. Please add any thoughts or examples in the comments if you have them!
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