- What Is Buyer Etiquette?
- 1. Respond to Seller Messages Quickly
- 2. Ask Relevant Questions About the Business
- 3. Don’t Make an Offer Without Talking to the Seller
- 4. Archive the Deal If You’re Not Interested
- 5. Ensure You Want the Same Things
- 6. Pay Attention to How You Present Your Terms
- 7. Communicate Without Losing Leverage
- What You Should Expect From Sellers
Buying a business online should be no different from buying one in person. Though you can’t shake hands or read body language over a coffee, your tone and behavior signal to sellers whether or not you’d be a good fit. They want to close deals with people they like and respect.
Below, you’ll find tips to help you make a good first impression and show the seller why they should sell their business to you. Commit these buyer etiquette lessons to memory (or pretend your mom is lecturing you about them) to close the deal of your dreams.
What Is Buyer Etiquette?
Buyer etiquette is a set of behaviors to help you build rapport with sellers you meet in an acquisition marketplace. Why does rapport matter? Because people buy from people. The friendlier you are with the seller, the likelier you are to develop a trusting relationship lasting from your first conversation to signing the APA and beyond.
Why Do You Need to Know About Buyer Etiquette?
Good etiquette closes deals. Bad etiquette kills them. You might think an acquisition is just a transaction, all numbers and hard-nosed negotiation, but founders want to sell to people they like and respect. Someone who’ll take care of their employees, assets, and legacy.
Etiquette threads your acquisition from beginning to end. Being on good terms with the founder while going through tricky stages like due diligence can eliminate friction and help you resolve issues peacefully. The same applies after closing day should you need help with the transition.
Plus, acquisition circles run small. A poor reputation may prevent other sellers from working with you no matter how qualified you look on paper. Ask yourself if it’s worth being pushy or dismissive when courtesy gets you a better result – even if the deal fails.
Below, explore our tips for how to engage in good buyer behaviors and improve your chances of closing a quality deal on Acquire.com
1. Respond to Seller Messages Quickly
Say a listing catches your eye on Acquire.com. You request access, sign an NDA, and the seller approves your request. They ask about your interest in their listing, and you respond with… nothing. How’s that going to help you close a deal?
It doesn’t. You’ve opened communication with the seller, and now, your job is to respond to their questions, introduce yourself, and explain your interest. Ignoring them won’t advance the sale or paint you as a master negotiator. If anything, the seller will question your seriousness and drop you for a more enthusiastic buyer.
Even if you respond several days or weeks later, it’s likely too late for the seller. They want to close a deal with someone prompt and proactive, not a time-waster.
How Long to Wait Between Messages
Ideally, you and the seller will respond to messages within 24 hours. If you know you’ll be away from your computer for an extended time, notify the seller so they’re prepared.
After a long delay, some sellers will follow up to confirm you’re still interested. Respond to these messages as soon as possible, and don’t be afraid to tell them you’re passing on the sale. As hard as it is to tell someone bad news, it’s better to be honest and not leave them hanging after several follow-up messages.
How to Respond to Sellers’ Opening Messages
Opening messages’ content will vary, but most sellers will expect one of three responses from you after approving your access request:
- “Hey, I’m interested. I need some time to review the business.”
- “I’m no longer interested. Here are the reasons why.”
- “I’m interested, but I have a few more questions. Can you answer these questions?”
Use one of these responses to clarify your intentions. Even if you later find the business isn’t a good fit, continue communicating with the seller so they know where you stand at each step.
Any time you step away from the deal, explain why. It might help the seller find another buyer later or fix what’s wrong with their business now. Your feedback, in effect, helps founders succeed, which is a win for everyone in the startup community – including you.
Just look at Julian Lumpkin, founder of SuccessKit. He listed his business on Acquire.com only to get positive feedback and criticism from potential buyers. They showed him how to improve the business and inspired him to try new strategies to scale it. Today, Julian and SuccessKit continue thriving thanks to those buyers’ advice and kindness.
How to Introduce Yourself
If the seller doesn’t reach out first, break the ice and introduce yourself. Someone needs to start the conversation, so don’t be afraid to put yourself out there to get the deal moving.
Whether you or the seller reach out first, include these talking points in your introduction:
- “Hi, I’m Buyer McBuyer, and this is why I’m interested in your listing.”
- “I opened this listing and requested access because I saw this.”
- “Here’s my background.”
- “Here’s how I plan on funding this transaction.”
If possible, verify your funds on Acquire.com by sending in your financial statements. You’ll receive a verified checkmark, letting sellers know you have the funds to acquire a company. It’ll also lend credibility to your early conversations, building trust and helping the deal advance.
Other acquisition topics to cover in early messages include an ideal acquisition timeline and your pricing expectations. The more you open up about your intentions, the more likely the seller will agree to better terms for you.
2. Ask Relevant Questions About the Business
Before responding to seller questions or asking your own, review the listing to get the basic facts down. Don’t delay the deal by asking the seller questions they already answered in the listing, like “What’s your asking price?” or “What’s your gross TTM revenue?” Sellers field dozens of messages daily and don’t want to waste time answering redundant questions.
Plus, they’ll quickly realize you didn’t do your homework. Talk about a deal starting on the wrong foot.
But if the seller hasn’t crafted a perfect listing, you’ll uncover missing information by asking thoughtful, relevant questions to learn more about the business.
Examples of productive questions include:
- What does your ideal transaction look like?
- What is the ideal buyer profile for this transaction?
- What is more important to you: price or timing?
- If we can agree on most of your deal requirements, are you open to seller financing?
- What would you do if you wished to double the revenue of the business?
By asking these questions, you show you’ve done your research and are serious about this deal. The seller will appreciate your initiative, especially if you send a calendar invite for a buyer-seller meeting with your questions.
For more potential questions to ask sellers, check out our guide.
3. Don’t Make an Offer Without Talking to the Seller
Don’t send a letter of intent (LOI) without talking to the seller first. They don’t know you, your intentions, or whether you can even fund the transaction. In the words of one of our M&A experts, “That’s probably as rude as you can get in terms of bad buyer etiquette.”
It might be acceptable to make an offer on a $5,000 to $10,000 listing without speaking to the founder, but not on a multimillion-dollar business. It wastes everyone’s time.
The seller won’t take you seriously because they know you’re not interested in learning about the business. A serious buyer would want to know as much as possible before entering a six, seven, or eight-figure deal.
If you don’t know what to say to the seller, consult our list of questions above and our suggested introduction.
4. Archive the Deal If You’re Not Interested
Not interested in a deal anymore? Archive it. While we’ve developed many features to help you close, including LOI, APA, and NDA builders, one of our most overlooked features is the archive button. Use it to let sellers know when you’re passing on deals (button pictured below).
Why use the archive button? One, it cleans up your dashboard. Two, it lets sellers know you’re not interested (bonus points if you add a message explaining why). And three, you won’t receive any messages asking for updates since archiving prevents further messages between you.
Some buyers, unfortunately, avoid archiving a startup to keep a listing open and check its status every few weeks or months. They wait for the price to drop and the seller to become desperate so they can swoop in and snatch a better deal. The seller, meanwhile, doesn’t know whether or not they’re still interested because the communication lines remain open.
This type of behavior reflects poorly on you. It shows you’re unwilling to be direct about why the price is too high or why you’re reluctant to pull the trigger. If you address those concerns directly, the seller might cut you a better deal before editing their listing publicly. Honesty closes deals.
5. Ensure You Want the Same Things
Put yourself in the seller’s shoes for a moment. Imagine you’ve vetted a buyer, checked out their LinkedIn, and convinced yourself they’re a good fit. You sit down at the table to negotiate, and the buyer lowballs you on the purchase price or imposes onerous terms. What happened to the qualified buyer you trusted to make a fair deal?
Too many acquisitions reach this stage without properly setting expectations. You and the seller know what you want to get out of the deal – now you just have to be transparent about it.
Get these difficult conversations out of the way early. Address your needs from the beginning, whether it’s seller financing, a specific asset, or a transition plan. There’s no point in advancing with the deal if you and the seller are set on specific (but very different) terms.
Remember you’ll work with the seller post-closing as they transition the business to you. Acquisitions require you and the seller to keep in touch for at least a few months if not years. Complete the sale on good terms so they continue cooperating with you post-closing.
Ultimately, don’t propose a deal the seller will never agree to and expect to continue the acquisition process.
6. Pay Attention to How You Present Your Terms
Like a text or email, online messages can lack nuance. You can’t always read tone or social cues, so invite the seller to chat via phone or video call for better communication.
The chat breaks the ice between you, and you’ll get a feel for the seller’s personality, motivations, and expectations for the deal, and they get the same from you.
Whether you chat virtually or talk in a buyer-seller call, use polite, empathetic language to put the seller at ease. Be clear and concise without being abrupt, and present options over ultimatums.
Focus on how you say something as much as the content. Even if you’re quitting the deal, be upfront and explain why you’re unhappy with their terms. Sharing your thoughts will help the seller find another buyer and let the two of you part on good terms.
7. Communicate Without Losing Leverage
Yes, you indeed want to negotiate the best price and close an acquisition on ideal terms. But you can maintain your advantage in deal-making while still being courteous.
From as early as the chat bar, some buyers like to play coy or cut-throat with sellers so they seem in control of the deal. But responding quickly, asking questions, or revealing your intentions isn’t a sign of weakness. It shows a willingness to get things done.
The more direct you are, the quicker the deal moves. Evading questions or acting uninterested to influence the seller to reduce the price is seldom an effective tactic. Tell the seller why you’re hesitant to pay the current price. Explain what you need to see to justify paying the asking price.
During buyer-seller meetings, it’s okay to put on more of a poker face. You don’t want to reveal all your cards right away, but you do want to build trust with the seller. Explain how you’ll finance the acquisition, why you’re looking to buy, and what concerns stand out to you. Start an open and honest conversation to get both of you on the same page.
What You Should Expect From Sellers
You’ve learned how buyer etiquette impacts deal-making on Acquire.com’s marketplace. What about seller behaviors?
Sellers can help or harm a deal with their actions too, and for a more comprehensive look, check out our seller etiquette guide here. But below, we’ve summarized a few seller behaviors to watch for when you start deal-making.
- Do they send an opening message after you sign the NDA? Sellers should want to get to know you and your acquisition goals early on. Proactive sellers will break the ice by asking, “Hey, thanks for reaching out. What got you interested in my listing specifically? And how do you plan on funding this transaction?”
- Do they keep in regular contact? Messaging you and responding quickly shows an initiative to get things done. The data even backs it up, with a reported 15 percent of sellers who respond to your messages closing deals, compared to 6 percent who only respond half the time.
- Are they respectful and transparent, especially when entertaining multiple offers? Sellers should never accept one offer without telling you or other buyers what’s going on. If the seller doesn’t pick your deal, they must let you know as soon as possible so you can take your business elsewhere. Meanwhile, the seller can focus on their current deal without worrying about burnt bridges.
How Can an Acquisition Fail?
Acquisitions involve a good deal of risk for you and the seller, and even the tiniest shift in circumstance can kill a deal. Unfortunately, these risks have led to between 70 and 90 percent of M&A deals failing, according to Harvard Business Review.
Potential issues that can ruin an acquisition include:
- Entering negotiations with different expectations and refusing to budge on your terms
- Finding financial or legal issues during due diligence
- Experiencing financial issues on your end that stop you from funding the acquisition
- Misunderstanding your target company and acquiring a startup that doesn’t provide the value you thought it would
- Not planning for a thorough transition (including what happens to employees, how operations will run, and what the role of the seller will be post-closing)
- Not preparing for external factors (look at what happened to Nicolas Huxley when his main negotiating partners were fired unexpectedly)
- Ignoring company culture differences and trying to force polar groups together
Anything can disrupt an acquisition, but the best thing you can do is prepare for the worst-case scenario. Plan ahead so you’re ready to start the acquisition process over again, even if you’re emotionally or mentally exhausted. Having a backup plan will save you stress later on.
What Questions Should You Ask Sellers During an Acquisition?
You should ask questions throughout almost every stage of the acquisition process, from initial chats to drafting the APA. Clarifying the state of the business or where you stand with the seller is never a bad thing, and it’s better to over-communicate than under-communicate.
Before you sign an LOI, here are some sample questions you can ask in early buyer-seller chats:
- Why are you selling your business?
- How did you arrive at your valuation?
- Are you open to different deal structures?
- What does your ideal transaction look like?
- What is your ideal buyer profile?
- Where are you getting customers?
- What is your churn rate?
For more example questions to ask before signing an LOI, check out our guide.
As you conduct due diligence (financial, legal, operational, technical, and more), dig deep into the business’s records, and don’t be afraid to ask the seller direct questions. Examples include:
- What’s the relationship between you and your clients?
- Who are your top customers?
- What has led to your high churn or growth rate?
- What’s your revenue per customer?
- What debts do you carry?
- Who are your most important competitors?
- What are the costs and profit margins of your products and services?
- What software and hardware does the company use?
- Do you outsource any of your IT responsibilities?
- What are your active software licenses?
- What is your company’s past, current, and future litigation history?
- What are your insurance policies?
- Are there potential antitrust concerns that could arise due to this acquisition?
Explore more information about financial due diligence in our latest blog.
How Do You Determine If an Acquisition Is Worth It?
When deciding on a startup to acquire, evaluate its assets and metrics to see if they align with your acquisition goals. For example, if you want to acquire a SaaS business, you must ensure the churn and customer acquisition costs are low while customer retention is high. You’ll also assess the quality of the code and its documentation.
Other factors apply to all startup types, from Saas to ecommerce to agencies. Analyze the market, for instance, to see if you can expand it and if you face tough competition. Look at the company culture and determine if these employees would merge well with your current workers. Ensure the business has no litigation issues or overwhelming debts to carry.
And of course, evaluate the proposed deal structure for that acquisition. Is the seller set on all cash at closing or are they open to seller financing? What would the integration process look like and what role would the seller play in transitioning the business? Are they open to signing a non-compete and non-solicitation agreement?
Answer these questions and more to determine if you can see that business fitting into your future.
How Long Do Most Acquisitions Take?
Every deal timeline will vary depending on the nature of the sale. A complex, multimillion-dollar SaaS company will take longer to acquire than a $5,000 ecommerce shop, for example.
Generally, most sales take three to six months to complete after accepting the offer, conducting due diligence, and negotiating terms for an asset purchase agreement (APA). The bigger the company, the more there is to review and plan for future integration. Some M&A deals even take years to complete.
The best way to streamline the acquisition process is to have all your documentation and funding prepared so you can immediately move on to the next step.
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.