10 Feb Selling a Business Is Like Applying to Join a Country Club
A Denver-based business owner called me today to discuss his desire to sell. He said:
“I know a handful of companies that would be really good buyers for this business. I could just call them, but for some reason that doesn’t feel right. Why?”
This business owner’s instincts are right, and he’s in the minority. A good many business owner-sellers make the mistake of handling the sale themselves. After all, “if you want a job done right, do it yourself,” right? But “For Sale by Business Owner” is not the way to garner maximum value. It’s not the way to maintain confidentiality. It’s not the way to get the deal done in a timely manner.
Pitching for your own benefit just does not work well. Why? I explained it to the Denver business owner like this:
Joe Wright would like to join Old Pine Country Club, the most prestigious in the region. Joe knows several members, so he calls them and expresses his interest. Each is a bit taken aback by his directness. No big deal, but when they learn that Joe called several of them, it becomes a bit of a joke among the members. And because Joe’s the subject of ridicule, nobody wants to sponsor Joe and nobody’s very excited about him becoming a member.
Kevin Best also wants to join Old Pine, and has friends who are members, but he instinctively knows the job is one best handled by a representative. It’s a bit like enticing a cat onto your lap. He knows the members will want him only if he doesn’t want it too badly, and he’s humble and appreciative. So Joe doesn’t make calls and inquiries himself but rather figures out who might be the most willing and able to represent him. Then, when he happens to be around this person and the time is right, he expresses his high regard for the club and the quality of the membership. Inevitably, the member says, “Hey, Joe, you should join.”
Now Kevin reacts with great humility and flattery, but he’s careful to temper his enthusiasm. He says, “If you would like to have me as a member, I would not object, but I doubt seriously that I meet the qualifications,” or something of that order.
Kevin’s sponsor now takes it upon himself to call various members and explain what a great guy Kevin is and what a great member he’d be. The sponsor makes it his personal mission to get Kevin in, and the members lend their support because of the sponsor’s efforts as much as anything. And because Kevin is not tooting his own horn, everyone trusts that what Kevin’s sponsor says about Kevin is true. In fact, because perception is reality, all those flattering things being said about Kevin ARE true.
Kevin’s application is well received, he gets in, and it’s an easy and enjoyable process for him. All he has to do is smile and be gracious. Joe Wright? Unfortunately, he’s still making calls, schmoozing, and word’s all over town that he wants to get into Old Pine, but nobody wants him.
Buyers simply do not trust sellers who peddle their own business. They innately think something must be wrong. But when a skilled representative calls and talks to buyers and explains why such and such business is a great investment opportunity, and that Mr. Seller is a great guy, buyers listen and the seller can do what he SHOULD limit himself to in the process: running the business and being a “nice guy.”
Selling a business is like applying to join a country club. Nobody wants to pad the pockets of a person who toots his own horn.