Lance Hood:               With all the emotional and psychological issues on the part of the seller what does it really take to get a deal done?

Richard Parker:           Keep in mind this is a highly emotional time for them so you've got to be sensitive to that. But at the same time what you want to do is you need to know their deal hot buttons.

                                    For example, is the down payment more important than the total price? Is having a quick closing more important than the price of the business? Is there restrictions related to a non-compete, something that they're concerned about?

                                    Those hot buttons are all issues that are easy to identify and here's how to do them. You make an offer. You make an offer on the business. You make an offer on the business that includes price, terms, conditions, deal structure, all of the different clauses that we walkthrough with people because that is the only thing that is really going to trigger a response from the seller so you'll be able to know what it is that they're concerned about.

                                    For example, if you say to them, "How quickly do you want to get it done?" And they say, "Oh I'd like to get this done sooner than later," and you put in your contract that you want to have a 120 day closing period between the time that you have reached the agreement and close the deal, and they comeback and they say to you, "No. We want to get it done in 30 days." Well that should raise a red flag. The red flag maybe legitimate, but it may be a case of they have something planned.

                                    "Well, why do you want to have the closing so quickly?" "Well we want to get the business sold quickly and then we're going to start our traveling. And I've basically said to my wife within 30 days of me selling this business we're on the road." Well what does that tell you? That can tell you couple things.

                                    Number one, they're highly motivated. Number two they've got plans and place which accelerate that or raise the bar on that motivation. Number three the closer you get to the date that they have fixed in their mind of when they want to be free of the business, the more aggressively you could potentially negotiate.

                                    So as you get closer to that date, you may want to hang on a little bit as far you finalizing what your offer may be as you get closer to that date. The problem is if you need them to stick around to help you learn the business, transition the business, and train you for the business, and you need them around for a couple of months, you're going to penalize yourself if wait too long.

                                    So, but again, making an offer is what is going to extract their hot buttons. It brings them to the surface immediately.

                                    The other thing is determine how tied to the business. Some people sell a business and forget about it. End of story. They've sold it, they're moving onto the next stage in their life and they wipe their hands of it. If they have seller notes in place which we always convince them to do that, but that's their only tie to the business and their only concern is they just want to make sure that that note gets paid. Nothing else.

                                    You have other people who have ties to the business. They see that as their legacy. They put their blood, sweat, tears, and beers like I always say into that business to make sure it was successful. And they feel a strong emotional attachment to leaving that business.

                                    It's also funny, you get some of these sellers who may have been the most miserable SOBs you could ever possibly imagine and treated their employees like dog scrap all these years. And suddenly when you start talking to them they say, "What are you doing with my employees?" They all of a sudden feel some sort of obligation to their employees. I mean sort of the obligation that they should have years ago when the people were working for them. So in those cases you obviously don't want to be saying, "Well we're getting rid of so-and-so. We're getting rid of so-and-so."

And on that point we always tell people when you first get into the business you don't want to make any changes. You first have to get the guts of the business into your belly. But those are some of things that a seller could be concerned about, and some of them are rational, and some of them aren't. But you need to understand what those are, and good questions are what elicits that information along with an offer of course.

                                    The key is you need to ask lots, and lots, and lots of questions. And specific pointed questions because good questions beget more questions. What you need to do is you need to understand the guts of the business. They shouldn't be general questions. A lot of buyers go into this process and they start speaking to sellers and will ask questions that really focus more upon "How am I going to keep this business alive? What can you tell Mr. Seller that can make me comfortable that the business is going to continue? How do I know that there's not going to be this drastic change the day you handover the keys?"

                                    Those are good questions but the questions really have to be geared more towards understanding the core of the business. Asking pointed questions. "How does it work? Take me through the process of when a customer walks through the door, right through the time that that product is delivered to them and it's paid. How does that work? Who's involved? How do you determine the pricing structure? Who takes care of them? What follow up is done? What if there's service that's required?"

                                    All these type of things regardless of the type of business, has its different sales process but that's what you need to dig in and understand, because during those good questions that's when the seller's emotions related to certain aspects of the business are going to come to the surface. You're going find out that they take pride in certain things, or don't do other things well. And those are when all those important issues to the forefront because again, very often the seller's going to be taking you through the process and they're tied to all of those little processes emotionally. They recall how those things got implemented et cetera.

                                    One of the things that's very important is the seller is going to ask you a lot of questions especially if they're financing you. It's important that you're very cagey in your replies. I urge people really never to disclose their plans in great detail.

                                    The ideal situation in which you should be answering and this should be your strategy as well is, "I want to get in and learn the business. I have not intention of bringing in my own people unless you suggest that I do." Because you want to strategically have continuity in place. If you come in like the new sheriff with the guns blazing - it's fine to be the new sheriff in town but you don't come in with guns a blazing and shooting everything that moves because everybody's going to panic. As it is the employees are going to very worried about their jobs. And the truth is, their jobs are safer with a new boss then they were with the old one, because the new guy needs them more than the old guy did theoretically. While their jobs are safe, you could never convince them of that.

                                    So if you come in and they don't see any change, and people - most people are adverse to change especially employees. If employees were open minded, readily open minded to change they would be employers not employees, so most of them very often are going to be adverse to change. So you don't come in there and start putting in brand new policies, procedures, new marketing strategies, boom, boom, boom, right from the get go. You have to learn the business first.

                                    It's okay to make some cosmetic changes, paint the place, freshen it up. They have to sense that there is change in place. Fix up your office the way you like it as opposed to the old boss's office. And it's important that you have very extensive dialogue with the employees and bring them comfort to let them know that there are no changes. I mean I always like to tell people, "Your jobs are completely safe unless you don't do your job well. And that doesn't matter whether it is me that is the buyer, someone else that was a new owner, or the prior owner. As long as you do your job you have nothing to worry about. You're safe as could possibly be. Right now I need you and I'm going to continue to need you."

                                    "Part of the reason why I bought this business was because of the caliber of employees. So I'm not making any changes. I'm going to learn this business first. We're going decide upon strategy that makes sense together. I want to grow this business, but as far as your job you have nothing to worry about. Just keep doing your job, do it well, and your job is safe."

Lance Hood:               Yeah. I was wondering how you address people's fears of losing their jobs so that they'd remain relaxed throughout the transition.

Richard Parker:           Well everybody is nervous. Every single employee is nervous and it's a normal fear and you have to address that fear. Typically the best way to do it is by letting them know that there are no drastic changes that are going turnaround their lives overnight. You want to improve and grow the business, but their jobs are safe.

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