3 Questions You MUST Ask Every Seller


The first full week of every month we’re going to do hyper focus on a singular dealmaking topic…

Last month, we started with deal origination. This week, I want to tackle seller meetings.

We’ll end the week with a YouTube LIVE training and Q&A on the subject, so look for details on that in Wednesday’s email.

But there’s no better way to kick start seller meetings week than to address the three critical questions you MUST ask EVERY seller when you first meet.

Say you’ve found a deal directly or through a broker. You have some very basic information and now it’s time for you to meet the seller — either virtually or face to face — and get into the weeds on the business and the deal.

I’ve created a list of 30 questions every buyer needs to ask to understand:

Today I’m going to reveal the top three and share why they are so critical.

Question #1: Why are you selling the business?

This is . If I only get this one answered in the first meeting, I figure it’s been a worthwhile trip.

Let me walk you through two extremes…

Seller A is an entrepreneur. They’ve built up the business and want to sell it at its peak. They want to maximize the cash they get out of the deal because they don’t really value legacy, the employees or the business they’ve built. They just want the cash.

That’s 20% or so of sellers — avoid this type. They will sell to a trade buyer and deal with extended due diligence, a longer closing time and the risk the business will be ripped apart.

On the other hand, seller B wants to retire. He or she is exhausted, truly burned out. They LOVE the business, its employees and customers… and will only sell to someone they trust to take it forward.

THIS is the seller you want. A seller who is highly motivated to exit and wants a deal that benefits the business at large. For me, this is the most important facet of a leveraged buyout (LBO), so this should be where you focus.

We teach you to probe seller psychology in a very big way because sellers sell their businesses for many different reasons — health, boredom and retirement are just a few.

Yet often when asking this question, you won’t get a straight answer right away. You need to look at the seller’s body language, which is why meeting face to face or worst case, over zoom, is critical.

If the seller starts looking away, blinking rapidly or touching his or her face, it tells you it’s not a truthful answer… so keep probing.

Question #2: What’s your marketing strategy? (i.e., How does the business win new customers?)

Once you know WHY they’re selling, it’s time to understand HOW the business currently grows.

I start by asking “If you weren’t selling the business and had unlimited resources, how would you grow it?”

This is a great way to frame the marketing strategy question because it takes the seller on an emotional journey.

At first, the seller will smile and quickly remember why they love the business. They will tell you about the great plans they once had… and why they never implemented them.

But the reality is, most small businesses do little to no marketing.

I asked a seller just of a U.K. professional services business this question the other day.

The seller replied, “That’s what’s great about our business, Carl. We don’t have to do any marketing. All of our revenue is repeat customers and word of mouth referrals.”

Now I LOVE hearing that for two reasons…

First, that answer tells you it’s a great business. Not only do customers keep returning, but they refer their friends and associates.

That’s powerful. It means the business doesn’t just have customers… it has raving fans.

Second, I KNOW as soon as I acquire that business, I can rely on that solid, dependable revenue base while implementing a marketing strategy to grow the business.

It means the business will go through an evolution versus a revolution… and that’s great for the employees when it comes to maintaining business continuity and managing cultural change.

Question #3: Who in the business is most critical, and can one of them operate it?

I ask this is because I’m always looking for a general manager (GM) to run the business for me. I don’t ever want to buy a business then have to jump in to operate it day to day. I’m an owner-investor not an owner-manager.

If you want to manage the business you buy, that’s perfectly fine. However, it will limit you to the location of the business and make it harder to do more than one deal unless you do bolt-on acquisitions.

Even then, you will find yourself spending time on the strategic work of the business, so it’s still critical to have a solid GM or management team to run the tactical operations. (This is also important when buying a business that isn’t in the dead center of your lane.)

I have asked these three questions on every deal I’ve done for almost three decades and I promise…

Not only do they work, but they will set you apart as a sophisticated buyer.

This is also why I tell all new business buyers to do their first deal in a sector they know so they can have solid conversations with confidence.

Otherwise, you should partner with someone who does know the sector inside-out and take them with you to meet the seller. A partner with sector knowledge will give you more credibility and gravitas as you begin forging a relationship with the current owner.

So those are my top three questions. Make sure you ask them each and every time.

I’ll be back on Wednesday to define the acronym TCRS… and explain why it’s hard to have successful meetings without it.

Until then, bye for now.

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