When I started my job with a Wall Street investment bank in 1992, my first-ever boss told me the most important lesson in dealmaking…
And to this day, I haven’t forgotten it.
What he said resonated with me because of who I was at the time.
I enjoyed going to nightclubs…
And I loved meeting women in nightclubs.
But this isn’t some long-winded story about chasing skirts in the Big Apple. My point – and the critically important lesson here – is this:
When you go to a nightclub to meet women, where is the best spot to do that?
Out on the dance floor, right?
Not standing around with your mates ogling all the beautiful women from the edge of the dance floor. No!
Put your drink down, get out there and strut your stuff!
Because on the dance floor – it’s a game of psychology.
Let me explain…
Let’s say you’re dancing toward a woman and she moves away… then you continue dancing towards her and she moves away again. Chances are she doesn’t like you and you should find someone else.
However – let’s say you dance toward her once and then dance away… if she dances towards you, you’ve got a shot.
When my boss told me this, I thought of all the hours I wasted dancing after women only for them to dance away.
The ones who danced back toward me… well, it was a different outcome!
But what’s dancing got to do with dealmaking?
Imagine the dancers are not young adults but buyers and sellers.
As a business buyer, if you are making all the moves – “dancing” toward the seller – and the seller isn’t responding, it tells you they aren’t interested (or playing hard to get).
Try dancing away from them. Go cold. Look at other opportunities.
If the seller IS interested in a deal with you – and believes you have other opportunities – they will dance right over to you.
That said, it’s very important that the tango is not one way but mutual. Then you can build amazing rapport and close the deal.
Here are two examples when this has happened to me…
On a very recent deal that closed within the past week, we hit a snag.
The deal was agreed upon. The closing payment was only the surplus cash, and the rest of the deal was a seller finance note and earn-out.
The issue was the consultancy agreement. The seller had agreed to stay on within the business for three days a week. We agreed on a rate inclusive of VAT (value-added tax), a consumption tax most common in Europe that’s added at every step of the supply chain from production to point of sale.
At the final hour, the seller wanted it exclusive of VAT – which was a ¬£300 difference per day. Not a large amount of money… but I wanted to hold my ground.
Then the seller completely ignored me on the closing. He was dancing away…
So I thought to myself – I’m buying this business for absolutely none of my own money and the business can easily afford the extra fees. So I decided to dance toward the seller, messaged him and agreed to the change.
We closed the deal the same day.
I may have lost that battle… but ultimately, I won the war.
Next, I have another deal where I have been dancing toward the seller for weeks. We agreed on a deal, but now he is suffering seller’s remorse.
His business has grown significantly since we signed the letter of intent. All the legal terms have been agreed on and all the funding is in place. (It’s an SBA 7[a] loan deal).
Now the seller wants an earn-out. I said no. I stopped dancing toward him. I left him alone for three weeks. Not a single communication. (To be fair, it was also over the Christmas and New Year’s holidays.)
Well, well, guess who came back and is just starting to dance back toward me.
See? It’s powerful. Don’t be afraid to dance away.
If the seller dances back toward you (even after a period), it’s a very positive thing.
So get onto that dealmaking dance floor and make your moves.
Dance toward sellers and then dance away. If they follow you, you are IN!
Until next time, bye for now.
Editor and co-founder, Dealmaker Wealth Society