Acquisition Aces - Issue 5

Read Time - 3.5 minutes

The Easily Acquired Superpower That Makes Acquiring A Business Frictionless

When talking about the military, people like to focus on its hard edges. Logistics. Tactics. Things that go boom. Stuff like that. The United States armed forces are very good at these things. Most people don’t know that there is a whole other set of soft skills that help our men and women in uniform get the job done. Here is a picture of me practicing one of those soft skills.

On one level, I'm smiling in a picture. On a deeper level, I am engaging in the art of rapport. Rapport is defined as: a close and harmonious relationship in which the people or groups concerned understand each other's feelings or ideas and communicate well. It is a critical skill when dealing with the locals on the ground in a foreign land. It can be the difference between life and death. Its use, however, is not limited only to the battlefield.

Often, rapport is the only thing that gets an acquisition deal to the finish line. Read on to find out why.

Rapport Is A Requirement, Not A Luxury

When you are acquiring a boring business, you are not just trading money for an asset. Most business owners consider their enterprise as part of the family, treating it with special care from the moment they create it. This is important to remember when you are negotiating a buyout or an equity deal. If the profit and loss sheet is the only thing that matters, it makes you look like a mercenary. No one wants to sell their baby to a hired gun.

If you aren’t aware of this dynamic, you can torpedo the deal without ever knowing why. The more rapport there is the more communication that occurs. You can’t fix problems you don’t know about.

This becomes even more important if the deal has an equity component. Not only is the owner selling you their baby, but they are also signing up to metaphorically co-parent it with you. If you don’t show them that you care about the business, they are going to assume you don’t and scuttle the deal.

Business owners want to trust who they are negotiating with. Give them a reason to.

Rapport Is A Hedge Against Unforeseen Events

You are not just sauntering down to the local coffee shop to buy a latte. Acquiring a business is a complicated economic transaction. There are a lot of moving parts. This means that there are more opportunities for things to go wrong during the process.

It can be something obvious, such as when due diligence reveals that the business isn’t as profitable as you initially thought. Other times it can be something unforeseen, like your broker goes rogue and says some unflattering or inflammatory statements to the seller.

Whatever roadblock shows up, the soft skill of rapport may be the only thing you have that can save the deal. Let’s look at some principles you can use to build a strong connection with the buyer.

Rapport Cannot Be Purchased (It Must Be Built)

There are two different methods to build connection during the deal negotiation process Use them both.

The first method centers around deliverables. Make sure that you come prepared with real action steps that will improve the business. Lay out clear expectations on what the end state looks like for all involved. This will take some work in advance but the results more than pay for the effort involved. More effort upfront will prevent bigger problems on the backend.

The second method focuses on reps. If you turn a sterile deal into a “high touch” process, you will reap the rewards. Invest as much time as you can in contact with the seller. Conversations, encouragement, and even a little bit of admiration will go a long way to getting the deal done.

Most people are unwilling to spend the extra time to gain the benefits of bringing rapport into a deal. Then again, most people aren’t cut out to be an Acquisition Ace. I have used this soft skill on every acquisition in my portfolio. I only wished I had learned about its importance earlier. Don’t make the same mistake I did. Use it early, use it often, and reap the rewards.

PS - Coaching compresses timeframes. If you want help finding the perfect deal for you, book a time on my calendar here to explore becoming an Acquisition Ace: Calendar

Ben, I Want to learn more…

If you feel that you are constantly working "in" the business instead of "on" the business and feel that your goal of financial freedom has led you to a prison of your own design.

You are not alone, I used to be there as well.

I have 5 companies and counting and work less than 20 hours a week on them - COMBINED.

It is not rocket science and I can help you do the same for your business.

Choose a time on my Calendar and we will get to it.

Onward,

Ben

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