How To Use Time Wisely When Buying a Business

hourglass-620397_1280-768x579Almost as many songs have been written about ‘time’ as have been written about ‘love.’ Why? Because time—either too much, or too little–can make all the difference in many things, including a love affair or a business deal.

Take that business deal for example, a buyer is excited about buying the business his broker has shown him. And the more due diligence he does, the more excited he gets.  Unfortunately, he hasn’t been doing anything about buying that business except for the due diligence, and he’s been taking his time with that.  He wants everything to be just right.

But he hasn’t applied for the loan he will need to finance part of the purchase.  He hasn’t talked to anyone about insurance, his accountant or his financial planner about accessing his 401K.  He’s done nothing about making sure the landlord will continue with the current lease agreement.

Unfortunately, the bank has a process they must go through, too. And that takes time.  All of the other people he considers part of his ‘team’ of advisors also have other commitments and needs they have to fit into their schedules.  Once he’s decided he want to go forward on the deal, a lot of time can pass before much progress is made.

And the excited buyer can’t understand when the deal starts to fall through.

The seller has decided there must be a problem with the buyer. Is his financial situation weak? Maybe the buyer can’t handle managing the business.  The seller can’t be faulted for a perception that the buyer isn’t really serious.  The seller very well may look at other buyers more seriously since this deal seems to be at a standstill.

“Deal Fatigue” is something that happens quite frequently, but not because it has to.  “Deal Fatigue” can be totally avoided, but not without work, effort and…time.

If the buyer is showing his serious intentions by doing his due diligence and applying for his bank loan at the same time, the seller is going to feel the buyer’s urgency.

If the buyer is gathering the information needed for insurance, licenses and a long-term lease, the seller is going to know that progress is being made, even if it isn’t obvious.

If the buyer is starting to negotiate terms for the buy-sell agreement and his attorney is documenting what is agreed to and advising on technical points, the seller can feel assured that a down payment might be coming soon.

A serious buyer must be in control of time.  It means he is setting due dates and following up at the appropriate time.  He’s keeping the lines of communication open through his Peterson Acquisitions broker.  The buyer is being a leader and the seller will see it and feel confident he doesn’t need to be looking over the current buyer’s shoulder for a ‘more serious’ buyer.

And it will only be a matter of time before everyone meets at the closing table.