In the business acquisition practice in which BuyInside works, trust is crucial to ultimately reaching a transaction. Without trust, both the buying and selling parties are going to find fault with everything.
What we regularly see from parties who are selling a business is that they do not dare to say everything, because they are afraid that the buyer will interpret it negatively. Eventually the buyer finds out and then it only causes distrust. In my opinion, it works best if someone selling is very open and honest about everything. The buying party on the other side of the table would otherwise become suspicious. You can feel that. And it comes out later anyway if you leave something out.
Taking time for it
I advise my clients who want to buy a business to take the time to build and maintain trust. Ultimately, they are the ones who will continue a business and a seller wants to have confidence that someone is capable of doing so. That the new owner will not immediately squander the business that has been carefully built up over many years.
So the buyer must also put in the time to show that he can do it. Basically, it's like a job interview. In addition to just paying money as a buyer, of course, the buyer must also be a suitable successor to the selling owner. The selling party looks at it the same way. He is giving away his baby, so he must have confidence in his successor. On the other hand, sometimes things are presented so rosy by the seller that you start to distrust it. As the selling party, you just shouldn't do that, because it doesn't help in the process.
Building mutual trust takes time. Both parties have to go through that whole process of building trust. You shouldn't want to rush through it. As a buyer, you may be on hold for a while because the seller still wants to go on vacation to think about it. Or wants to talk about it with someone else. I encounter that very often.
Gaining trust
What BuyInside contributes to gaining trust on both sides? We tell the buyer to pay attention and invest time to gain trust. And that trust must come from both sides.
When I enter with a buyer into a business he wants to buy, as an adviser I also try to gain the seller's trust. I show that I'm not there to make the most of the deal, but that I'm there to go about that transaction in a realistic and fair way.
Investing in the relationship is important then, because you can't just walk away from a deal. I certainly don't want to come across as soft, but it's part of the process to take the right steps to get somewhere. A pleasant process is more likely to succeed in the final stage of negotiations. All parties benefit. And even after the transaction, the rapport is much better if you have always told each other the truth.
Giving each other something
Ultimately, it has to click between buyer and seller. Then the transaction is right. Then I literally say: we are very stupid if we do not bring this to a successful conclusion. If you want to get the most out of it - and that goes for both parties - then such a transaction will often not succeed. Granting each other something remains crucial.
