Your First Reaction To A Proactive Buyer May Be That He Is A Gift From The Gods.

You get an unexpected and unsolicited approach. Someone wanting to buy a business, a proactive buyer, makes an approach. Does it get any better than this? You may have to pinch yourself to be sure your aren't dreaming.


So far so good. You may have already heard that when someone wants to give you money, try to find a way to take it. That will most likely be your initial reaction to an unsolicited approach.


What do you know about this proactive buyer, before meeting him? If the approach was from someone wishing to buy a business, you know he may not be all that particular about the type of business that he wants. You are probably safe in assuming that he wants something with potential, and that can be bought at a price that is close to fair market value. Or a bit below.


The proactive buyer may well be a bit more sophisticated than many other buyers. He found a way to identify you and approach you. Granted that may all that difficult, but he took action. He preferred to initiate action, be proactive, rather than being reactive, and merely responding to advertisements for businesses for sale.


If he approached you directly, the proactive buyer isn't trying to conceal his identify. So he is unlikely to be a competitor, or doesn't care that you know he wants to buy a competitor. If the latter is true, he probably has a particular strategy that he is trying to execute. How do you handle a competitor offering to buy your business?


Carefully. You can not be certain that he isn't on a fishing trip to see how well you are doing. But if the approach was direct, and in the open, that is unlikely. A working hypothesis is that he will use his own business as the standard of comparison for valuation. To the extent that you can demonstrate that your systems and processes are superior to those in his business, and that your business is more profitable than his own, he may entertain a premium price.


A proactive buyer may choose a different approach. He may decide to use a third party to contact you. He may have a law firm, or an accounting firm contact you saying that they represent someone interested in buying a business. Someone to act in similar role to an agent. In this situation, the approach will likely include more specifics. If may not identify the person wanting to buy a business as a competitor, if he is one. But it is likely to include some broad parameters describing what he is seeking.


In this case the proactive buyer will have provided some parameters to the individual or firm making the approach. He wouldn't want them approaching every firm in the Yellow Pages. Remember that they will be on his payroll in some way, so he has to have a targeted approach. So he has had to make some assumptions about your business, and many other businesses to narrow his target market. He is likely to have given the party that will approach you some kind of scripted message to include with the approach.


That scripted message can either be designed for verbal use, or for inclusion in a written approach. You will likely be able to gain some useful information about the person wanting to buy a business from the scripted message. If the approach made is by telephone, your best bet is to indicate some level of interest, and ask the caller to confirm the contents of the call in writing.


Either way, you will now be headed down the road to exchanging some level of information with the proactive buyer through his agent. You may also request that the identify of the buyer be disclosed before supplying any information. It is a reasonable request, and one that you will likely be expected to make.


Another way of judging the quality of the prospective buyer, is through the quality of the firm acting as agent, if that is the method of approach. If it comes through a lawyer with a sleazy reputation, you will probably be safe in being less than thrilled. On the other hand, if it comes from the most prestigious law firm in the country, that should tell you something different.


You may return from Proactive Buyer to Buyer Types , or go to

Home Page