Sellers Leveraging Offers

March 10, 2023

by a searcher from Indiana University, Bloomington/Indianapolis - Kelley School of Business in New York, NY, USA

Hi All,

I've now had two proprietary transactions that I thought were extremely close on terms where once I submitted the LOI, the sellers came back and said they'd need several weeks to respond. In both cases, coincidentally, because of personal travel. The first case was right ahead of the holidays so I understood this, but it turned out the seller used this time to leverage the offer I'd made to solicit other offers and they decided to move forward with another party (according to our conversations, at the time of the initial offer, the sellers were not in discussions with any other parties). In the second case, I've stressed to the seller that while I'm happy to revisit discussions when they are back, the offer may not be on the table in a month. From my vantage point, it seems like it could be a similar situation. Both LOIs had expiration dates one week from the date the offer was submitted.

For any of you who have had a similar discussion with a seller, how have you approached this with the seller?

Thanks in advance for your feedback.

Reply by a searcher
from University of Illinois at Chicago in Madison, WI, USA

Wouldn’t take it personal. A seller with good advisors will be told to create a market for the business. Even if they shop the offer, you want to be building a relationship with them that goes beyond the numbers. Talk about family, travel, etc. Business less.

When sellers tell me that they need time. I just give them time. I don’t try to box them in and rush the signing. Yes time kills all deals. But if you push too hard, they start to feel “sold” and it breaks down trust a bit.

The idea of selling your business and walking away with a pile of cash sounds great until you have a real offer with a real closing date: Then things get real and they realize that the thing that they have spent the past 20+ years nurturing will be gone. Communicate to them that you understand this feeling. Reiterate your value offering to them (*insert typical searchfunder pitch*). Then give them time.

Reply by a professional
from Rice University in Jeffersonville, West Norriton, PA 19403, USA

First of all, I am new to SF - and am really enjoying the interaction - but really dont understand the "anonymous" post feature - when this platform is trying to build a new business community. That not withstanding, when I represent the buy side of a deal i include a "rules of engagement" with the seller or sellers agent, once mutual interest is shown. This outlines the setting of expectations regarding qualitative aspects of the deal like communication turn around times. If you cant come to an agreement on those basic functions prior to the deep dive, the likelihood of wasting a ton of time in DD without closing is much higher.

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