My Seller Went Dark!

March 29, 2024

by a searcher from State University of New York (SUNY) in Atlanta, GA, USA

As is common in the lower middle and micro-market, many deals aren’t presented the right way.

Sometimes brokers embellish the cash flow and add backs, information is omitted, only to be discovered during the expensive due diligence process, or they don’t have experience with complicated processes and transactions like F-Reorgs.

Other times, the buyer is more motivated than the seller.

Over the past 30 days, I’ve been actively working on acquiring a personal home care provider in the Atlanta area.

This particular deal looks good on paper.

I found it on BizBuySell and reached out to the broker.

Unfortunately, the broker did not prepare a CIM or Confidential Information Memorandum.

Many brokers, at least in Georgia, primarily sell real estate. Selling businesses is usually incidental to their core business.

They did share the financials.

The revenue and EBITDA are exactly in the range that I’m looking for. I submitted an LOI and the seller accepted my offer.

I met with the seller, his broker, and I could sense his enthusiasm. I love speaking to and working with motivated sellers.

We talked about the industry, the economy, his key employees, and his personal reasons for selling, among other things.

I was impressed by his business acumen and successes. This was such a wonderful conversation. I was looking forward to working with him throughout the acquisition process and the transition period.

After the meeting, I followed up with an email with a summary of what we discussed. The email included a series of questions that I needed answers to, so we could get the ball rolling.

It’s been two and a half weeks since our initial meeting and I’ve only received the answers to half of the questions that I asked.

As you can imagine, this is a bit frustrating. I continue to reach out but I also have other irons in the fire including:

- Medicare home health and private duty company

- Non-emergency medical transportation company

-Youth behavioral services provider

I’ll keep plugging away. Sometimes, the wrong deal will give way to the right one.

We are actively investing across the healthcare spectrum.

Our goal is to identify the right businesses with the right people.

We are building a platform that provides quality care and opportunities to create mutually beneficial outcomes for all of our stakeholders.

If you are a business owner, investor, service provider, or just want to find out more about who I am and what I do, feel free to contact me at redacted for reading. If you found this informative, please like, comment, or repost. I look forward to sharing more of my journey with you.

Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA

H‌i ^redacted‌, Sorry to hear that you're experiencing difficulties. Lack of a quality and thorough CIM is a red flag. It would be great if more sellers knew to inquire about it before engaging with a broker. The process of creating the CIM usually gathers a lot of information that can be used to address buyer questions. Regarding the second part of your post, 2.5 weeks may be a little long. However, depending on what was requested, if it was reports or data that they don't have or normally look at, they may be stuck. They could also be waiting for input from their CPA, and this time of year is notoriously busy for accountants. That being said, you might be able to get most of what you need by prioritizing the items that are still outstanding into critical and nice-to-have categories. For the critical items, you can ask if there is another similar set of information that they could provide more easily. Most sellers don't have a financial reporting team or even a single person to do this work, so they are likely trying to put everything together in their “spare time"

Reply by a searcher
from University of Wisconsin in Los Angeles, CA, USA

Unfortunately it is common for unsophisticated sellers represented by small brokers to drop off. The brokers are pretty aggressive, especially in healthcare, so In many instances the sellers do not need to sell and once they learn about all the work that goes into it they shy away.

All we can do is move slow with these sellers, focus on building a relationship, and keep diligence requests short and simple. Once you get to the purchase agreement you have less flexibility, I have also had deals die when discussing reps and warranties and pushing for F-Reorgs. If that happens, and we cannot educate them that these are standard practices any buyer would ask for, best to just keep in touch, and hope in the future they are more motivated to sell.

+7 more replies.

Join the discussion