First-Time Buyer Series: The First Meeting

First Published 11/7/17

Congratulations! You have found a potential seller who is willing to talk about selling his or her practice or book to you. You are going to meet in order for the two of you to “take each other’s temperature.” Let’s talk about what you do want to do and what you do not.

Keep in mind that everything that follows is critical, even if you have known the advisor for a decade or more. You are now entering into a different kind of conversation than you have ever had before. In fact, the next paragraph is particularly important if you have known the advisor for some period of time.

In the first few articles in this series, we stressed the importance of being empathetic to the Seller and understanding that for him or her, the impending end of a career can be extremely unsettling. We also focused on the fact that you never want to begin talking about financial arrangements or even deal structure, until you have completed your due diligence on the book of relationships. They all ask, but resist by saying it would not be fair of you to speculate until you have a lot more information. I always say that if I do not have all the data I need, I would have no other choice but to discount the price for risk, but that will not be the case later on in the process. Most sellers appreciate this point of view.

In our view, the first meeting carries the following objectives:

• For you to look like a great buyer to the Seller.

• To take the measure of this person,

o Can you work with him or her?

o Will she be reasonable?

o Is he really open to selling, or just “kicking tires?”

• To find out if the book and the Seller merit spending your time to conduct a due diligence investigation.

For purposes of the first objective, you want to have your Value Proposition ready to articulate, including why you want to buy, why you are ready to buy, and why you over some other buyer. You sharing first is a test to see if the Seller is willing to open up and tell you things you need to know. If he or she is not, that is your first negative sign, and perhaps the only one you should need to rule this one out.

If the Seller is open, you want to ask questions like:

• How did you get started in this business? (People like to tell their story and appreciate the chance).

• Why are you considering selling? As in an earlier article, if the Seller is not specific, worry that he or she will never close.

• How do you manage money?

• What other services do you offer?

• Why do clients come to you?

The questions need to be conversational, rather than delivered in a rapid fire manner. Don’t grill them, simply be interested. Offer something of yourself and then ask about them.

By the end of what should be no more than an hour, you should have a pretty good read on whether more time is merited. Always keep the final objective in mind:

• A transition during which the Seller is enthusiastically introducing you to his or her clients. Anything short of this is not going to be accretive for either one of you.

Be serious, but be friendly. Remember, he or she is sizing you up too. As we have indicated before, it is not a bidding transaction, it is a courting process. Offer to sign a mutual Non-Disclosure to indicate how important their position is. If you can walk away from this meeting with agreement to continue getting to know each other, you are moving in a very positive direction.

Casey M. Corrie