So you want to buy a car? You are ready for a new ride so out with the old and you go searching for a new vehicle. You don’t want a brand new one that would cost $50,000. Buying used makes sense, since you want to retire one day and still live well.
You search the newspapers, craigslist, E bay. Without a doubt the cars you are interested in have the make, model, miles, price, color, a picture, what city the car is in and more. So what is your first question when you call? WHY ARE YOU SELLING IT?
You don’t expect to hear, “This motor is about to blow in the next 100 miles and I am selling this to you so I won’t be out a lot of money and with no wheels.”
The mind goes there doesn’t it? “This person knows something REALLY bad about this car. And you don’t want to be stupid. You want to know if something is wrong with it before you pay the money and drive away with it.
But wait….let’s go back to the second sentence. You are ready for a new ride so out with the old and you go searching for a new vehicle. You see how far your mind has traveled off course from wanting a new one?
This happens all the time with buyers looking for a business. As soon as the buyer has all the initial, important information, they automatically think, “If this seller is doing so well, then why are they selling the business?”
Never mind that tax returns have been provided showing up to 3 years of financial records. There are signed tax statements, cash flow statements and–if we show the business to multiple buyers–we have most likely had meetings with the owner and several buyers. But the question, “Why are you trying to sell me this blown motor? Are you telling me the whole story?” has probably entered every buyer’s mind. “If you are making money in this business why would you ever leave?”
So let’s go to the beginning again. You are ready for a new ride so out with the old and you go searching for a new vehicle.
I refer to this very human glitch in everyone’s mind as a “Mental Pothole.”
The buyer is ALWAYS working somewhere else or has other businesses, yet the ‘mental pothole’ can’t allow him to think clearly. They can’t see themselves in the same position. They don’t ask themselves, “If you are making money at your job, why would you ever move forward and progress or seek a new path?”
The truth is, we all have an expiration date. Everything we do has an expiration date. 90% of the time, the reason someone wants to sell a company is shelf life.
Don’t believe me? Have you ever had ‘the shelf life’ factor hit you in the past? Remember how you couldn’t wait to get out of Junior High to go to High School? Remember how quickly that wore off and you couldn’t wait to get out of High School.
Remember how much fun you had driving a car when you first started driving? Is that how you feel now as you make your 45-minute sojourn to work every day now?
Remember when you were a virgin? Aren’t you really glad that being a virgin had a shelf life? Remember when the thrill of owning a home was something that filled you with pride and accomplishment? How long did that last? Can you remember when you worked at that car wash or perhaps as a car hop? Could you go back and do that again? Did those jobs have an expiration date?
Even the fun of drinking beers with your buddies in college had a shelf life. Yeah, even the things we love most have a shelf life. Everything we do has a shelf life. Sadly enough, even life has an expiration date. Nothing is permanent.
When someone sells a business, they are ready for a new vehicle.
Coincidentally, when a buyer is looking for a business, it is generally to get out of a desk job or to find something with little more upward potential. Is this buyer going to marry him or herself to this new business forever? Statistics show that within 9 years the buyer will be the new seller. He (or she) will be looking for a new vehicle to take him on new learning, earning and growing adventures.
Everything changes. Our needs change. Our desires. Our professional acumen and our journey are shaped every step of the way. Just because someone is ready to move in a different direction doesn’t mean they are selling you a blown motor. They are just seeking a different path in life. Chances are, the buyer will be so happy to be the new owner because he or she is ready for the same kind of change.
This is why business acquisitions happen: Change.