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Great M&A Advisors Sell Companies for More

by Basil Peters on March 1, 2011 · 0 comments

I’m not sure I should be typing this. It’s something I hate to admit about myself.

But the reality is all investors are subject to the same psychological imperfections. It doesn’t matter whether they are grannies buying ten shares of Google, or hotshot CEO’s acquiring billion dollar companies, none of us are so perfect that we are not susceptible to a great sales pitch. This is a really important consideration when selecting an M&A advisor.

None of us are so perfect we can’t be sold

I can admit it…. it just happened to me… again. I consider myself an astute investor focused on the fundamentals. I’d recently been watching a local company with a good CEO, but wasn’t absolutely convinced on the model or that it was a good investment.

One of my close business friends was working with the company to syndicate a financing. We had lunch to discuss a variety of topics. When I brought up this company I still thought the chances of me investing were one out of three.

My friend told me it was too late. The financing was sold out. I immediately took the bait. All of a sudden I really wanted to invest. I heard myself calling in favors and almost begging for an allocation. I wanted twice as much as I thought my maximum investment would be before I sat down. My friend wouldn’t promise me anything, but said I could talk to the guy managing the ‘book’ (the list of investors).

When I contacted the fellow who actually knew how the financing was going, he wasn’t even sure when it was closing. He showed no sense of urgency and seemed really happy to ‘pencil me in’ (add me to the list of investors.)

Right then I knew my good friend had sold me using one of the oldest tricks in the book.

We all want to buy something everyone else also wants. Even more, we want to buy something that is in such demand it’s hard to get. All (us) investors are herd animals.

I was a little unhappy with my friend for using such crude tactics on me. I knew exactly which of my human imperfections he used to close me, but I didn’t reconsider, or even reduce my investment. I guess I’m just not that perfect.

Some Salespeople are Truly Great

The valuable outcome of the fact that we all susceptible to being sold is that in every business there are a few salespeople who are truly great. My friend is certainly one. These greats are usually about 3x better than the average salesperson. Even when they have exactly the same pool of suspects (potential buyers) and exactly the same product or service to sell, they will close three times more than the other salespeople. I have seen this first hand in dozens of companies and situations.

The reason these ‘great’ salespeople are that much more productive is because they can connect to those universal parts of human psychology that make us susceptible to a good sales pitch. Some of these great salespeople do this with an unconscious competence – in other words, they don’t even realize what they’re doing. If you ask them, they just shrug their shoulders and say they are just ‘connecting with the buyer’ or ‘having fun selling’. But what is really happening is much more subtle.

These great salespeople can more effectively build a relationship, and interface at an almost non-verbal level, with the prospective buyer. They often know intuitively when and how to close the transaction.

When It’s Your Company Being Sold – Find a Great M&A Advisor

In industries with inefficient markets, and more elastic pricing, these great sales people regularly get much higher prices for exactly the same product. These are the sales people who are often described as being able to sell ‘ice to Eskimos”.

These ‘greats’ are the M&A advisors you want on your team when it’s time to sell your company. A great M&A advisor can account for a significant part of the additional 50 to 100% increase in price that is possible in most company sales.

Once you appreciate how an outstanding M&A advisor can make that much difference in the sales price of your company, no matter how much you have to pay them, it’s an attractive return on investment.

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