When it comes to offers, is the cultural fit of the buyer more critical than the highest offer?
Most business owners choose the highest offer even if there isn’t a cultural fit with the buyer. But, unfortunately, in this instance, most business owners are wrong.
The cultural fit of the buyer must be your North Star when comparing offers. Yes, the cultural fit of the buyer trumps higher offers all day. Every day.
Who am I, and how do I know?
I started my eLearning business right out of my MBA program with no money, experience, or team.
My new best friend was failure which happened every day. The truth is that I had no business being in business.
My grit and determination were the saving grace to welcome success.
When my business was successful, I received a 7-figure offer from an experienced buyer.
To everyone’s dismay, I said “no” to the 7-figure offer. Instead, I said “yes” to mastering the art and science of a liquidity event. Then, two years later, I said “yes” to a 9-figure offer.
Today, I pay it forward. I help business owners through the Deep Wealth Experience. At the heart of the Deep Wealth Experience is the 9-step roadmap.
The 9-step roadmap is what I created to welcome my 9-figure exit.
One of the steps in the 9-step roadmap is the Future Buyer. If you want the best offer and not any offer, stop thinking like a business owner. Instead, learn how to think like a buyer.
Five proven strategies help you identify the buyer with the best cultural fit. In the process, you also identify the best offer.
Do you know how to identify the cultural fit of the buyer that gives you the best offer?
Growth is never by mere chance; it is the result of forces working together — James Cash Penney
When it comes to the cultural fit of the buyer, find the buyer who helps your business grow the most.
Some buyers can help your business grow more than others.
It doesn’t matter if you leave your business the day after the deal or stay on after the deal. Your mission is to look after and protect the stakeholders of your business.
Your employees, customers, and suppliers are better off when your business grows.
When you think like a buyer, your ability to show how your business can grow with the new buyer does two things.
You increase both deal certainty and enterprise value.
What are the characteristics of a buyer who can help your business grow?
A buyer who has experience in your industry is also a buyer who can help speed up the growth of your business. Synergies is important.
Speaking of synergies, don’t discount buyers who don’t have experience in your industry. Experience in vertical markets is as necessary and can offer even more growth.
You don’t know what you don’t know. A buyer with experience in vertical markets can take your business places that you can’t. Growth comes in many different forms.
When determining the cultural fit of the buyer, find out how the buyer can help your business grow.
Right up there with growth is synergy. Buyers will tell you that they have synergies with your business.
Do you know how to separate fact from fiction?
Synergy is better than my way or your way. It’s our way — Stephen Covey
How do you find the buyer with the best synergy?
In the 9-step roadmap of preparation in the Deep Wealth Experience, step three is the Future Buyer.
Most business owners believe that only the buyer can ask questions. But, once again, in this instance, most business owners are wrong.
When it comes to the cultural fit of the buyer, you can and should do a deep dive on your top three buyers. In the Deep Wealth Experience, you learn how to run a reverse RFP on the top buyers.
During the process, you’ll learn about the buyer’s business. When you know the cultural fit of the buyer, you also know the buyer’s purpose and vision.
Compare each buyer’s purpose and vision to your purpose and vision. Look for areas of overlap. At the same time, find out if there are gaps and if the gaps are to your benefit.
Look for strategies with you and a buyer that helps you increase your profits. Most business owners are selfish during a liquidity event and think of themselves.
To increase enterprise value, think like a buyer. Then, find out how you can increase the profit for the buyer through synergy.
At the same time, find out how the experience the buyer has in managing gridlock issues. Gridlock issues are when what’s best for the buyer isn’t best for you, and vice-versa. Have the buyer provide examples to help you understand the cultural fit of the buyer.
Do you know the extra to look for when discovering the cultural fit of the buyer?
If you can laugh together, you can work together — Robert Orben
Knowing the cultural fit of the buyer is understanding the resources of the buyer.
On the art side of your liquidity event is the narrative you share with your buyer. There’s a reason the Deep Wealth Experience focuses on creating a winning narrative.
A winning narrative does three things for buyers. You increase trust, deal certainty, and enterprise value. At the same time, the deal closes faster. When it comes to your liquidity event, speed always wins.
Part of your narrative includes being vulnerable. You’re vulnerable when you share how you’ve failed in specific initiatives. For example, you may have failed because you lacked the talent, capital, and time.
Know that your so-called loss is a win for the buyer. This is yet another reason why you must understand the cultural fit of the buyer.
Understanding the resources of the buyer is understanding the buyer’s talent. A strong cultural fit of the buyer is a buyer that has the right people to lead the business.
A buyer can already have the people or have a track record of finding the right people. Either scenario is a winning one.
You also want to understand if the buyer has the capital to buy the business and run it. Buyers will either have the capital or will use financing to access capital. While financing gets the job done, it has risks. Know the type of financing and the risk associated with it.
How do you find out about the buyer’s resources? In the reverse RFP, have the buyer share examples with other businesses. The more details, the better.
Do you know the one area most business owners overlook, to their detriment, when it comes to buyers?
Resourcefulness trumps resources — Jeffrey Feldberg
Knowing the cultural fit of the buyer before signing the deal makes all the difference. The fatal mistake most business owners make is focusing only on the deal value.
When it comes to the cultural fit of the buyer, you need to know expectations around reporting.
The first area is all about the frequency, type, and duration of meetings.
One buyer may prefer all-day monthly meetings that are a marathon. Another buyer may prefer 90-minute quarterly meetings with a tight agenda.
The frequency and length of the meeting have an impact on the time required to prepare and attend.
The second area focuses on the types of reports required. For example, one buyer may want an encyclopedia of detailed reports. Another buyer prefers a few high-level reports.
The quantity and type of reports make a difference in the time and resources required to prepare.
The third area is knowing the Key Performance Indicators (KPIs). One buyer may want to keep it simple with a few KPIs that are meaningful. Another buyer may want many KPIs for reasons unknown.
Knowing the cultural fit of the buyer when it comes to reporting makes all the difference.
The power of the 9-step roadmap is preparation. When you’re prepared, you call the shots for your liquidity event. You also know in advance the cultural fit of the buyer you’ll select.
Your preparation leaves nothing to chance and sets you up for success with a deal that’s a win-win.
Do you know the one other area for the cultural fit of the buyer that can make or break the deal?
You are what you do, not what you say you’ll do — Carl Jung
You know the cultural fit of the buyer when you speak with references from the buyer.
The right types of references will tell you everything you need to know about a buyer’s character. It’s the same references that shine a bright spotlight on the cultural fit of a buyer.
A downfall of references is speaking with people who only say great things about the buyer. One powerful strategy is asking for five references for recent deals that were both won and lost.
Speaking with business owners who did a deal with a buyer confirms how the buyer operates. At the same time, speak to business owners who didn’t do the deal with the buyer. You’ll want to find out what happened in the hopes of finding a pattern.
References will help you determine if the management style is hands-on or hands off. You’ll also gain invaluable insights into the cultural fit of the buyer.
Why would a buyer provide references for lost deals?
Enter the power of an auction.
Buyers know that you have choices when you’re running an auction. A buyer who refuses to give you references for lost deals is not the buyer for you.
The power of the reverse RFP is transparency. You can’t believe you’ve identified the best buyer. You must know.
After all, you have one chance to get it right with your liquidity event, and you better make it count.
Knowing the cultural fit of the buyer goes a long way to helping you capture the best deal instead of any deal.
Your liquidity event is the most significant financial decision you’ll ever make. You don’t want to leave your hard work and sacrifice to chance when it comes to your liquidity event.
Through the 9-step roadmap, you ensure you’re prepared for your liquidity event. Part of your preparation is knowing how to find the cultural fit of the buyer. In the process, you capture the best deal instead of any deal.
Today, my passion is helping others do the same through the Deep Wealth Experience. At the heart of the Deep Wealth Experience is the 9-step roadmap of preparation.
When you’re prepared, you have the certainty that you’ll capture the maximum value. When you know, instead of believing, you do the right thing at the right time.
The 9-step roadmap of preparation protects you from being a statistic. Up to 90% of liquidity events fail. Of the “successful” deals, most business owners leave 50% to over 100% of the deal value with the buyer.
When it comes to the cultural fit of the buyer, are you wondering what to do and where do you start?
Your starting point is learning and mastering the first strategy. Once done, move on to the next strategy. Follow this process until you’ve mastered all five strategies.
Here’s to you and your success!
Your Biggest Raving Fan,