Responding to Buyers
How to handle buyer inquiries.
After several years in business, you might receive outreach from potential buyers and investors. Some are tire kickers, just fishing for information or a distressed opportunity, while others are serious buyers.
At ZoomShift, we would get outreach frequently and ignored most of it. Unfortunately, we may have missed out on some great opportunities because we didn't have a process in place.
So, how should you respond to these inquiries?
If you're not ready to sell, then the answer is simple.
Keep the conversation open, but don't waste your time. Here's why:
The sales process can be grueling. At best, it distracts you from running your business. At worst, it results in a failed deal, draining time and money and potentially hurting your business.
Other potential downsides to engaging before you are ready include:
- Negotiating From Weakness: Rapid deal-making can limit your options, pushing you towards unfavorable terms.
- Premature Exposure: If word gets out about a potential sale, it could unsettle vendors, customers, or employees, causing them to worry about the business's stability.
So, what's the best approach? Be curious, but non-committal.
Here's an email template I've found effective:
Thanks so much for reaching out. We aren't looking for investors or to sell at the moment. However, we'd like to learn more about your business and how we might partner in the future.
Can you please share your background and what interests you about our business? Cheers!
Genuine buyers will respond with detailed and professional messages, while time wasters will not reply or be vague and push for a call.
Your business is one of hundreds of potential targets for buyers. It's okay to insist on initial email interactions to gauge seriousness.
- Transparency: They provide clear information about their company or who they represent.
- Acquisition Rationale: They share how your business fits into their strategy.
- Track Record: They include a list of other successful acquisitions.
- Professionalism: They show respect for your time and privacy by offering to sign a non-disclosure agreement (NDA).
- Email Rapport: They are willing to engage via email without requiring a call.
- Industry Expertise: They include knowledge about your industry or market.
A buyer may not always directly reach out. For instance, when we sold ZoomShift, the buyer used a broker. We responded because the broker was thoughtful and professional about his outreach.
Record all interactions in a simple spreadsheet like this for easy tracking.
You can revisit these contacts when you are ready to sell.
If you're open to the idea of selling, then continue reading. The first thing you need to learn about is potential buyers.
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