This is a page from my book, “How I Sold My Business: A Personal Diary”
Marty, Jack, and I had breakfast with the three owners of our closest competitor today, another LLC here in town. I tend to be very competitive, and at least from my standpoint this meeting began very uncomfortably. Greeting your competitor, then looking at them across the table, with the thought of them buying your company, isn't very pleasant, and pretty much made me want to puke. But I agreed to this meeting, and told myself to suck it up.
As the meeting went on both sides opened up a little more, laughing about a few of our competitions against each other, and then tried to talk about our business without giving too much information away. Because they only compete with a portion of our business -- a part of the business I don't specialize in -- I haven't personally competed with them that often, though I hear their name all the time.
One of our competitions
The one time I know I competed with them, I won a project for over $300K (roughly 1/7th of our revenue for the year). Although I had the flu, Jack told me we were going to lose this deal, and I had to go to lunch with the president of our prospect's company to see if I could salvage it. Heavily medicated, I met with the customer, and listened to her concerns (while having to take two bathroom breaks to blow my nose, to put it politely). She wasn't very happy with our company at all to that point, and I agreed with Jack's initial assessment.
And then at one point during the lunch when I thought her attitude towards us had improved a little, it occurred to me that while she thought one thing about her project, the project was really about something quite different. So I said, "I don't know much about your project, I've left that to our team members to work out. But if your project is mostly about 'A', then you'll be fine if you go with our company or our competitor, but if your project is mostly about 'B', our company is in much better shape there. We have full-time employees to deal with 'B', while our competitor has to outsource that work."
I didn't say anything else, and just let her talk about what she thought her project was really about. As she spoke, I think it occurred to her that the project was indeed mostly about 'B'. While she didn't sign the contract there at the table -- we didn't even bring one -- she called Jack later in the afternoon to tell us we had won the deal.
So getting back to our meeting this morning with our competitors, they "laughed" about this a little bit, and asked what we did to win the deal. We told them that was a "secret sauce" we'd be glad to share if they wanted to buy our company, or we otherwise merge our companies.
About our competitor
The meeting was very interesting, and again, I can see why customers would do business with these guys. They approach business very differently than we do, and I'm sure they leave customers with a very different impression than we do, but they seem very aggressive, competent, and likeable. They did a lot of investigative work on us, and knew most of our customers, all the recent speaking engagements I had done lately, etc.
Why do you want to sell your business?
The most interesting question we run into at all of these meetings, including that first meeting with Marty, is "Why do you want to sell?" As a seller, you really have to be prepared to answer this question, because as I've learned, potential buyers ask it over and over again in different ways. I won't say they think you're lying, but I do think they're trying to figure out very hard what the problems are that are making you want to sell.
By now my usual response is that I could do this job for the rest of my life if we could just solve a couple of problems, primarily getting my schedule down to less than 60 hours a week, and finding good people to run projects. This isn't a lie, I really think I could do this for quite a while longer, especially if we got the hours under control. It's one thing to work all hours of the week when you're in your twenties and thirties, and something completely different to keep doing this in your forties. Other than working the extra long hours, I generally like what I do for a living, and at the very least I think I'm a decent business analyst and programmer, and I've written some pretty good software requirements specifications.
Getting back to our breakfast, things ended up well enough. Besides talking about business competitions and customers, we talked about most of our financials, and did the usual thing with their questions, answering the ones we were comfortable with, and putting of the others until we have a signed Letter of Intent.
Hopefully they got more information about us while also understanding our reluctance to share too much information. In the end it was also nice to see them as more human. Given my sports background, I won't go crazy and say that I like them, but I can respect them as competitors. Their understanding of business finances is solid, and their research on us was impressive.