THIS WEEK IN BROKEN DEALS

Here’s what’s in store for this week:

• Announcement: Get a free copy of our new ebook, The 10 Commandments of a Sellable Business

• Best Link: Ray Dalio Article: The Changing Domestic and World Orders Under the Trump Administration (LinkedIn)

• The Graveyard: Speed can shape deals. Go too slow and you’re perceived as disinterested. Move fast you set yourself apart from other buyers. In this week’s article, we go deep on exactly how to use speed to your advantage to close more deals.

• Work With Us: We help business brokers and M&A advisors with financial analysis. Reach out if you’d like some help on a success-fee basis.

ANNOUNCEMENT

Get our new ebook, The 10 Commandments of a Sellable Business!

This ebook contains the main principles we’ve uncovered analyzing hundreds of broken deals and describes the 10 things you must avoid to close more deals, including:

• Why focusing on price is often a mistake and how to use it to your advantage to speed your deal to a closing

• How to manage your team through closing so your sales stay strong

• The mindset every selller must have to guarantee a successful exit (and why avoiding it can cost you millions)

• And more…

Click this link now to download your free copy. 

BEST LINKS

Matt’s Favorites

• The story of IKEA on the Acquired Podcast (iTunes / Spotify)

• Ray Dalio Article: The Changing Domestic and World Orders Under the Trump Administration (LinkedIn)

Finance & Capital

• The Taxonomy of Moats, aka “How to get an unfair advantage” (Twitter)

• McGuire Woods 2024 Independent Sponsor Deal Survey - Podcast (iTunes / Spotify)

Deal Making

• An A+ reply when a prospective investor has passed on your deal (LinkedIn)

• How to generate quality deal flow (Twitter)

THE GRAVEYARD

How Buyer Speed Increases Seller Commitment & Closes Deals

Of the dozens of CEO’s, Searchers, and Owner’s I’ve worked with on M&A transactions over the last few years, some have had far more success than others in accomplishing the task at hand.

There are a lot of reasons why a given individual may or may not have success in business acquisitions, but today I am going to focus on a characteristic of the successful acquirer’s that has been very, very consistent – what I call “Speed to Seller Commitment”.

Those that are good at closing deals have a knack for using speed to build the seller’s commitment to go through the transaction process and close. Let’s explore.

The Deal Landscape

To understand the value of speed, we need to first understand the deal environment. Generally, whether a deal is sourced directly (“off market”) or through an intermediary, there will, at a minimum, be the potential of competition for the deal.

I’m sure you’re not shocked to hear this, but I think it deserves a little scrutiny - what is the mindset of a Seller who is being approached daily or weekly with new suitors for their company and trusted advisors who claim that the business is a “gold mine”?

Well, if you have read the previous newsletter entitled “Pretty Girl at the Party” Syndrome, you’ll know that a Seller with options will often feel very selective, and even have a bit of a sense of suspicion about all the people that are approaching him and their intentions regarding his or her company.

• Are they here to pump me for information and could secretly be a competitor?

• Do they want to try to negotiate me down and lowball an offer?

• Are they just a tire kicker?

• Do they even have any money or the ability to close a deal?

Overall, their mindset is not actually that conducive at the beginning to getting something done.

To do and Not to do

The Buyers I’ve worked with who have struggled in the acquisition game don’t seem to be able to “walk a mile in the other person’s shoes” in this regard very well.

As a Buyer, they are often concerned with the minutiae of the deal, trying to figure out a way to get a piece of information from the broker or the Seller which will convince them this is a No Lose proposition on their part. They spend huge amounts of time and energy searching for this “safety blanket” which will finally make them feel good about the deal.

The converse of this is understanding that in the moment you don’t have that luxury - you have to not only beat the other Buyers to the punch but actually change the Seller’s perception of you in the first place.

Taking this into consideration, here are some tips that I have proven very effective in the field:

1. Move very, very quickly in the early part of the deal. Pre LOI, it’s not an exaggeration to say that hours matter.

2. I advise clients that in the very earliest stages of a deal the best pace of communication is daily -

3. If you request a CIM, respond to the broker with comments and questions that evening.

4. Once you get a response, analyze the info and ask for more within the same day (or next day, if you got the response after business hours).

5. Keep up this pace for 5-10 business days, including asking for a meeting with the Owner, then send the LOI.

My experience is that most deals that eventually close have an LOI issued within 2-3 weeks of first contact.

Why does this work so well? Besides the obvious (getting your letter in first prevents other buyers from stealing the deal, and then the general fact of life that reality rewards action, not consideration), I believe it’s because of how effective this is at changing the Seller’s relationship with and perception of the Buyer.

Before, the Seller didn’t know if you were potentially a tire kicker. Now he knows, whatever else he thinks of you, that you certainly aren’t that. You move, you get stuff done.

Before, the Seller didn’t know if you were there to waste his time and lowball an offer. Now - the facts are at least on the table. It isn’t an imaginary future offer, it’s a number sitting on his desk.

The same logic applies to almost every facet of the deal - you have positioned yourself not as a problem - someone to generate a lot of time consuming diligence paperwork for - but rather a solution - he’s the guy that’s going to make me a millionaire!

And it’s this psychological shift that changes the tenor of the deal and produces the most needed resource a Buyer needs in order to bring it to a close - Seller Commitment.

It’s that commitment which is going to produce the energy for the Seller to respond to the (vast) diligence requests which are required to get the deal through the bank and correctly paper up the PA.

It’s that same commitment which is going to fuel the Seller to figure out the delicate ways of getting you in touch with Customers and Employees of the company that are actually going to allow you as a Buyer to get comfortable completing the transaction and committing your life to this new venture.

Handling Speed vs Commitment throughout the Deal

Strategically speaking, the Speed of the Deal should vary with the level of commitment for the entire course of the transaction.

We can divide up the different stages of the deal in the following way:

1. Pre LOI

2. Post LOI, Pre Banking Commitment Letter

3. Post Banking Commitment Letter, Pre Closing Date Set

4. Closing Date Set, not Closed yet

The graph above shows how, when Seller Commitment is low, the savvy buyer substitutes speed to generate momentum, energy, and buy-in (commitment).

It also indicates that, once you’ve got the Seller “on the hook” a little more, there is a bit of wiggle room in how to proceed. The speed never drops to a crawl, but it’s possible to use that space to get very comfortable with the deal as a Buyer and to work diligently to resolve the inevitable bumps in the road which will come on the way towards closing.

Roughly, this is how I explain the cadence to my Buyer Clients:

1. Pre LOI

   • The Broker and Seller should feel like you’re breaking down their door you’re so excited about the deal.

   • The goal here is to get to the front of the line of other Buyers by communicating your resume, deal team, and other bona fides as a way to show that you, not those other guys, are the serious one.

2. Post LOI, Pre Banking Commitment Letter

   • Have an immediate set of diligence questions pre planned, as well as requesting early meetings with their lawyer and deal team.

   • Set a cadence of weekly meetings, and make sure to have a list of progress you’ve made on your side (what diligence you’ve reviewed, what you are happy about, what you still need clarification on, etc.)

   • Remember, this is still “early” in the deal, so it isn’t all about YOU at this point - if you finish a diligence item, don’t just go on to the next. Let them know you’ve completed the task and are happy about, for example, customer concentration and that it won’t be a banking concern. This gives them a feeling of continuous progress.

3. Post Banking Commitment Letter, Pre Closing Date Set

   • I will never advise to move slowly, but you finally have a bit of leverage in the sale at this point. Once you’ve “shown them the money” it’s possible to start making asks which were difficult before, like:

     • Real Customer conversations

     • Getting verification there are no broiling employee issues,

     • etc.

   • While it’s helpful to maintain the weekly call cadence, a lot of the time this will simply become an update report on things the buyer needs from the seller in order to satisfy the myriad number of paperwork tasks that are still to be completed.

4. Closing Date Set, not Closed yet

   • By the time the PA is in its final negotiations and there is a solid or provisional closing date set, the tables have finally turned.

   • If you need 2 weeks because the bank missed something and their committee is on vacation, you can be pretty upfront about this kind of issue. Never with negative energy, but with a matter of fact way of speaking - it “is what it is”.

   • They understand that you’ve done all the heavy lifting to get it to this point, and you should simply be clear about outstanding items to correct in order to make the deal close.

Conclusion

Successful dealmakers know that closing isn’t just about a solid offer—it’s about matching speed to the Seller’s level of commitment. By moving fast when commitment is low and adapting as the deal progresses, savvy Buyers turn hesitation into buy-in. The best deals are won not by caution or aggression, but by those who create momentum, build trust, and keep things moving to the finish line.

THAT’S A WRAP

Before you go: Here are 2 ways we can help

Is your deal stuck? We may be able to help. Get a free 30-minute deal assessment here — LINK TO SCHEDULE ASSESSMENT CALL

Are you an M&A Advisor or Broker looking for Wall Street-level financial analysis support for your CIMs and client financial info? If so, we offer a success fee-based program to help you close more deals with less overhead. To learn more, schedule a call here — LINK TO LEARN ABOUT SUCCESS-BASED FINANCIAL ANALYSIS