Recently, I wrote a commentary on the psychology of selling a public relations firm. I discussed the mental gymnastics that the CEO must go through to engage in conversations with a prospective buyer.
Today I will wear another hat—that of a prospective buyer.
Much of what I will be discussing actually comes from sellers who have been persuaded to engage in initial conversations with prospective buyers in an attempt to learn about each other and their firms. The object is to establish initial chemistry to, at the very least, determine if the seller and buyer like each other enough to continue conversations. Many initial conversations don’t yield a second one. And today I’ll explain what sellers have told me that have turned them off to any further discussions beyond the very first one.
To begin with, some buyers assume a holier-than-thou attitude about their willingness to engage in a conversation with a prospective buyer. Sellers are often wary enough about losing their independence and having to report to a boss without having to feel that buyers are doing them a favor by deigning to even have an initial conversation with them.
And indeed some buyers do assume the attitude that they’re doing the sellers a favor by even chatting with them.
In such instances, the buyer is eager to tell the seller all about how fortunate the seller would be to even be considered as a possible acquisition. The buyer conducts the discussion like a job interview. What have you done for me lately and why should I acquire your firm?
In the meantime, the seller is thinking who needs this? I’m not desperate and don’t need to bow down to this individual even if he’s got a bigger organization than I do. He’s not really interested in my firm. All he wants to accomplish is to impress me with the clout of his organization and isn’t really interested in who I am, what I’ve built and why this would be a good situation for me.
The experienced buyer knows better. He’s done his homework on the seller’s agency and the founder/CEO as well. He already would know that the seller is an avid golfer. Or a stamp collector. Or a family man. And he will ask the seller questions about himself first before he discusses the seller’s firm. The adroit buyer wishes to establish a connection with the seller to make him feel comfortable and—most important—wanted.
Initial discussions between sellers and buyers fail because either the seller or buyer puts a line in the sand to appear cool and disinterested. When this occurs I witness newly created personalities on either part. I witness an aloofness that was specially constructed to create a power vacuum between the two parties.
My job as an acquisitions facilitator is to help prepare both sellers and buyers on how to conduct themselves during an initial conversation. I even dress rehearse both just like the way presidential debates are normally done. While initial discussions between sellers and buyers aren’t exactly in the category of debates, my job is to make certain that both parties don’t see it that way.
Initial discussions are a vital stepping stone to further constructive discussions between a seller and a buyer. More often than not, if an initial discussion goes well, chances are that there’s a better than even chance that a deal can be done.
You need to remember that an initial discussion will only take place if both a seller and a buyer decide that the other party looks like a good fit. Information about each had already been exchanged and an initial discussion is the natural next step.
This is all the more reason why that initial discussion and how it’s conducted is so important. The foundation for a successful transaction has already been put into place. Why should initial interest by either party wane because of an unsuccessful initial conversation? The answer is it shouldn’t. Not if it’s conducted properly by both buyer and seller.
The proper psychology of an initial conversation between a seller and a buyer is equality. No airs should be assumed by either party. It’s initially a discussion between equals, not master and supplicant. If buyers simply come off as interested to begin with and reflect congeniality, recognition of the accomplishments of the seller and share some anecdotes about how each got started in public relations—then the acquisition process will accelerate and flourish.
Art Stevens is managing partner of The Stevens Group, comprised of consultants to the PR agency profession and focusing on mergers, acquisitions and management consulting.