February 18th, 2011
Have I Got a Buyer for You?!
If it hasn’t happened already, before long you’ll likely get a call or letter with the possibility to change your life. A group will claim to have been retained by another company in the industry to acquire your company. Not just any company, they want to buy your company. They’ve taken note of your position in the industry, your performance and your products and they are on a mission to acquire your company. If you engage in a discussion with this group, you’ll find they are surprisingly short on details about their “client.” They will assure and distract you by saying their client is real and pays strong valuations and closes quickly, even for companies that are struggling.
They may request your company’s financial statements or pump you for information about your products and performance in the market. Wait a minute, you may think, hadn’t they already noticed those things and isn’t that the reason their client wanted to buy my company in the first place? The group may ask you for a retainer to get the sale process initiated. That should be a full stop, needle-across-the-record moment when you realize something is amiss. If the group truly worked for another company wishing to acquire your company, it would be a massive conflict of interest to also take money from your company. There are other points when this ruse can unravel, but most of you realize by now if you didn’t before that these callers and the senders of these letters have no actual client. They are fishing for individuals interested in selling, or who may be in trouble, with a false promise of a potential acquisition. If you provide them with enough information, they will then scramble to gin up a potential buyer for your company. Their hope is to get you far enough down the path that you move ahead with the acquisition and they can wrestle a fee out of somebody.
Anyone genuinely and legitimately calling on behalf of a real buyer will always be able to give you a relatively specific description of the buyer, even if they’ve been asked not to divulge the name. They will never ask you to give them money because they will have an agreement with the buyer. Beware of providing too much information to companies contacting you out of the blue. As always, most things sound too good to be true for a reason.