Talking to One Buyer at a Time Is the Most Expensive Habit in a Sale

Several, at the same time. One at a time is not a slower version of the same process; it is a different process with a worse outcome.

Owners run buyers sequentially because it feels orderly, and because it is how you would handle a single large customer. In a sale it reduces both the chance of closing anything and the number of offers you ever see.

What sequential actually produces

The usual shape. A buyer makes contact. You say you would consider selling if the price were right. Information goes over, frequently without an effective agreement in place. Meanwhile nothing is being done to generate interest from anyone else, because you are busy with the conversation in front of you.

When an offer eventually arrives, you have no way of knowing whether it is good. There is nothing to compare it to.

So the first failure is not that the price is low. It is that the price is unreadable.

The second failure is that nobody has to move

A buyer who knows they are the only party behaves exactly as you would in their position. They take their time. They ask for exclusivity early and get it. They come back after diligence with a request for a lower number, because the only alternative you have is to start over.

Competition is the single thing that reliably moves a price, and it does not have to be loud. A buyer who merely believes other credible parties are reading the same document negotiates differently from one who knows they are alone.

Earnings buyers all arrive at the same number

This is the part that surprises owners, and it is the strongest argument for running a real search.

Illustrative. An owner took a laboratory information systems company to market and the first round produced two interested buyers, within eight percent of each other. On paper that looked finished.

Neither had a strategic reason to want the company. They were buying earnings, and buyers of earnings all arrive at roughly the same number, which is why both offers landed in the same place.

His advisor declined both and went out again, this time hunting companies already selling adjacent services into the same laboratories. One emerged and came in substantially above both, on a structure with more cash at closing.

That was not a negotiating result and it could not have been argued into existence. The third buyer was pricing something the other two were not buying: what his product would earn sold through their existing accounts.

Which means the question is not how many, it is who

A longer list of buyers in your industry is not the same as a better list.

The useful question is which companies have a specific problem your company solves. Complementary products. Something they could sell through your customer base. A presence where you already are. A gap in their own management team that you would close.

Most owners cannot say in one sentence what they have that a specific buyer would want. Without that sentence there is nothing to go hunting with, and the process defaults to whoever happens to call.

Parallel does not mean an auction

There is a version of this that owners fear, and it is worth separating out.

Running several parties at once does not mean a public sale, a bidding event, or your company’s name circulating in your industry. A properly staged process releases a thin description widely and the real document narrowly. A large number of parties see something that identifies nobody; a handful ever receive the full picture.

Every one of those parties is moving on their own track, at their own stage, with their own agreement signed, and only one of them ever gets exclusivity.

What it costs to go exclusive without a field

Exclusivity is the moment the field disappears, and most of what you pay for running one buyer at a time gets charged here.

Inside exclusivity, the buyer’s investigation produces findings. Somebody then asks for less money. If three other parties were reading the same document last month, that request is a negotiation. If there were never any others, it is an invoice.

The price in a letter of intent was never a settled number. It was a number agreed on what the buyer had read, subject to what they would find. What you keep of it depends almost entirely on what else you had going at the moment they looked.

What getting it wrong costs

Two things, and only one of them is money.

The first is the premium you never saw, because the buyer who had a reason to pay it was never contacted, or was contacted eight months later when the first conversation had already consumed the year.

The second is the deal you lost for a reason that had nothing to do with your company. A buyer withdraws because a delay cost them too much time. A buyer is acquired by somebody else. A buyer’s fund runs out of room. None of those are predictable, and all of them are survivable if there is a second credible party in the process and fatal if there is not.

More on this: What It Costs to Have Only One Buyer; The Owner Who Had Two Buyers and Ended With Neither.

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This is what we do. Prism Edge builds the buyer universe around what your company specifically solves for a specific acquirer, not around who is in your industry, and runs those parties in parallel with staged access so the competition exists without the exposure. The offer you end up comparing things to is the whole point of the exercise.

The full chapter on creating multiple options, and the chapter on what a buyer will pay, are both in The Business Sale, free to download here.