Merger & Acquisition Insights

2 Reasons a Seller is Ignoring Your Offer to Buy His Business

Posted on February 21, 2020 by Spencer Tenney

You did your homework. You gathered detailed information from the seller and thoughtfully considered a proposal. You presented your proposal clearly in writing. You even asked some peers what they were offering on similar deals in an effort to make a fair proposal. Still, crickets. Why is the seller not engaging into a discussion or responding to your offer? Here are two reasons, and they may not be what you think.

  • The seller is interested but believes it is not a fair fight.

It is very common for a seller to withdraw from a transaction discussion when he believes that the buyer is much more experienced and knowledgeable about the deal process. The fear of being taken advantage of is a real issue and can prevent sellers from sharing what is really on their mind. Some sellers want to advocate for their company’s value but don’t know how. Withdrawing from the discussion is a safer course of action than doing or saying something that could embarrass themselves or damage the company.

 

  • The seller fears the unknown of life after transportation.

It is very difficult to think beyond transportation when you are deeply entrenched in owning and operating a business. An offer to purchase a transportation can be flattering for a seller. It can also create fear. Owners dedicate the lives to a business. Some refer to it as their “baby.” Responding to an offer makes the possibility of losing their “baby” a possible reality they don’t want to face. We often hear, “This is all I have ever known. What would I do if I sold my business?”

So what can you do if you are a buyer? First, show empathy. Don’t expect to this to be easy for a seller and remember that when you are asking for sensitive information. It is the largest transaction of a lifetime, so they should understandably be skeptical – of the process and of the likelihood that your interests are aligned with theirs. Second, give them confidence. If you sense they don’t think it’s a fair fight, make it a fair fight by recommending they get third party representation. If it’s the only way a deal gets done, what do you have to lose by equipping them to go the distance?

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