trouble with seller at the finish line
September 27, 2022
by a searcher from Pennsylvania State University in Philadelphia, PA, USA
Hi everyone, I'm at the finish line for a deal I've been really excited about but the sellers have started acting very difficult. We've been negotiating the purchase agreement, the seller note agreement, their employment agreements, etc. Normal tense conversations while negotiating but nothing out of the ordinary. The dynamic has changed between us and the sellers no longer want to speak with me without their attorney on the call. I feel there really isn't any trust between us and the relationship has deteriorated. 2 weeks ago I would have said we were absolutely going to close and now I feel it is less than 50%.
Having said all that, I still believe it's a great business, a good price, and a great fit for my search. Has anyone gone through this before? Thanks!
from Stanford University in Honolulu, HI, USA
* First: There is a chance that they may have said something that they thought you agreed to and then somehow the terms changed. If that is the case, you'd probably already know it. If not, going to dinner/lunch with them as others have mentioned and keeping an open mind & ears is your best option.
* Second & Third: They are in over their head and they know it. Or, they are tired of the telephone game.
So, what happens when you talk separately with them without the attorney? They go back to their attorney and the attorney asks them 10 questions that they can't answer and don't quite understand. And, the attorney might not completely understand as well, but wouldn't dare admit it. They feel like a fool, which is an uncomfortable spot to be when you are selling the castle you've been the king/queen of for so many years.
So, what do you do? Take some extra time in your discussions to be the educator and explainer in your phone calls. I prefer to start from first principles. It's like mentally orienting someone on a map. "As you recall, the purpose of the indemnity clause is to cover for losses. I need the indemnity clause because if I buy the business I need some assurance that ______. I don't think this situation would happen, but I would be being irresponsible not to have it. I'm sure you wouldn't trust your business to someone who is irresponsible, would you?"
* Fourth, the attorney is too inexperienced to appropriately assess risk. When you don't do a certain type of deal often, it's easy to default to everything is awful and scary. Being the educator and explainer helps with this. It's also fair to keep reiterating the purpose of the discussions. For example, "You have worked very hard to get to this point. The last 10% can feel as painful as the first 90%. This last 10% is about making sure we've clearly defined our roles and responsibilities going forward to avoid any misunderstandings. If we can make this happen, I will be running my dream business and you will be following your dream to travel around the country in your RV to see the grandkids in Arizona and Florida." In essence, keep everyone's eyes focused on the prize.
Unfortunately. it's the nature of a good deal that everyone has something to grumble about. But, so long as everyone's critical needs are met, it is a fair deal. If one side is too ecstatic, it probably means the other got shafted.
from University of Akron in Charlotte, NC, USA
Now, if you feel the trust is gone, it is hard to gain that back. Trust with the seller is probably the most important commodity. When lost, it's a hard blow to a deal.
If it were me, I would have an open, honest and transparent conversation with them... try to get to the root of the issue. However, the conversation and tone of that meeting should be one of partnership, leadership and non-attacking... Servant, humble leadership tone. Communication is the most important part of a deal.
In fact, in the deal above, right at the last minute, the seller got very angry. The selling broker called me and told me. I didn't really believe him (because he seemed to make things up a lot) so he got the seller on the phone. And he was definitely angry.
But I communicated with my buyers what was going on. They were very upset and I had to lead them away from confrontation and being defensive. Instead, we had to look to solutions and moving forward, which they finally got on board with.
They called the seller in the right mindset and approach... everything was good and the deal closed shortly thereafter.