Tips for encouraging sellers to move on submitted LOIs

by a searcher from University of Pennsylvania - The Wharton School

1 year ago

I submitted an LOI to a seller (proprietary deal - no intermediary such as a broker) three weeks ago and have had trouble getting the seller to even start the negotiating process. I have a sense the seller is trying to drum-up other competing offers and I'd like to strike a balance between being persistent and respectful. There is no offer-exploding deadline in the LOI. 

I'm wondering what tips folks might have for encouraging or motivating sellers to come to the table and start building momentum to get the LOI signed. Thanks in advance for any advice!

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searcher from University of Pennsylvania - The Wharton School

This won't be surprising to anyone, but I found out today that the seller has decided he is not particularly interested in or motivated to sell and wants to try to continue growing his business. This is a 180 from the past few conversations I had with him prior to submitting the LOI. Perhaps he was just fishing for a valuation. I guess this is the way the game works with attempting proprietary deals.

As many of you mentioned, if it takes 3 weeks to get a potential seller's attention, they probably are not actually serious about selling. On to the next.

11 months ago | like reply | 2 likes

searcher from The University of Michigan - Stephen M. Ross School of Business

I agree with the previous comments that you should include a deadline. And it's not too late to create one now. During my search, I was candid that I was buying one business. So when I submitted an LOI, I included a deadline (usually 3-5 days) and would communicate that I would refrain from submitting LOIs on any other deals until that deadline passed. To some degree it's a bluff. If they come back a day or two late I'm still accepting it and moving forward but it creates a sense of urgency and also indicates that you are working in good faith and not submitting LOIs on every deal you see.

If the seller hasn't engaged in a meaningful way in 3 weeks then I don't think they're serious about selling. I would tell them you have other deals in the pipeline and have been holding off on those while you waited on their response, but you now need to move forward if the LOI isn't accepted by XX date.

11 months ago | like reply | 1 like

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