Relationships > Financials In ETA
November 27, 2023
by a professional in Tampa, FL, USA
When buying an SMB, relationships matter as much, if not more, than financials
Why?
Well, this isn’t just a transaction
For the seller that is
Chances are they've run the business for the last 5, 10, 15, 20 or even 30+ years
This business is often their identity
It's their life's work…
Not to sound too cliche, but literally, it's their baby
So with that in mind, how do you make sure they want to sell the business to you over someone else or even PE?
-
Open communication - no hidden agendas or legal jargon. Just honest conversations about hopes and goals
-
Shared values - a focus on people, community, and values, not just profits
-
Personal connection - meeting in their hometown dive over beers, not just paperwork in a boardroom. Getting to know their families and aspirations after selling
Make it known to the owner that this business will be your life for the foreseeable future
You care about the seller, their business, its employees, and its legacy
This foundation of trust and respect enables crafting a deal that works for both parties
You might even find that a seller will WANT to sell the business to you over faceless PE shops or strategics
Even at a lower price!
The myth is you must be ruthless in deals
The truth is lead with empathy, vision, and ethics - and relationships will thrive
in Saskatoon, SK, Canada
One of our families most successful ventures started out by talking with an employee of a company that was cruel and cut-throat. This employee knew that they were a key person of the operation. He is a community leader, hard worker, and most importantly trusted by the clients. He left that business, got a little investment from our side, and started his own business. It has grown into a 50-person company! We are celebrating 10 years this weekend.
That business he left experienced a minimum 50% loss of revenue. We are looking into acquiring it in the next few years to lock in the region.
People make the company.
in Montreal, QC, Canada
Made an offer, which we learned afterwards happened to be 10% lower than the other option. Seller picked us because of the fit.
So it does happen. On another LOI, the seller was willing to increase the seller's note because he "trusted us" and remembered being in our shoes starting with little cash.
Be nice and honest out there, first because it's the right thing to do and second because it might just help you get the deal done.