I Put My Foot Down

An old Chinese proverb says, “He who speaks first, loses.” Consequently, I always advise my clients to simply answer any questions put to them by the purchaser during negotiations, without offering any additional information or overtures.

I tell them that when the purchaser is allowed to speak first, we can assess the proposals as they are given to us. It was for this reason that we developed the Robbinex NAP (No Asking Price) Program.

The following is an excerpt from Doug’s book “There’s Always a Way to Sell Your Business”

I Put My Foot Down

I once had a client who had a large manufacturing business. It operated in a 125,000-square-foot facility. Len had a son, Peter, working in the business. We discussed the likelihood that he would take over the business.

Len was adamant that Peter was incapable of running the business. Nor did he have any desire or motivation to run it. Also, Peter lacked the financial capacity to even contemplate acquiring it.

With that information in hand, I went out to find a buyer. I found one in Pittsburgh, forty years old, six foot three, could have passed for Mr. America. He had just sold his own stock- brokerage business for $2 million and wanted something in the manufacturing area.

Skip flew up and I introduced him to our client and showed him around the business. Skip liked the business so he came back and gave us a proposal. I delivered the proposal to Len on Friday around noon.

“Do you mind if I think about it over the weekend?” Len asked, after having looked over the proposal in detail.

“Of course not,” I replied. “Let’s talk about it on Monday morning.”

At 8:15 on Monday morning Len called me.

“I have a problem,” he said. “I reviewed the proposal with my family and told them that I was ready to accept it when my son piped up and said that if that was all I wanted for the business, he would buy it.”

I reminded Len that he had told me that Peter had no money, so how was he going to pay for it?

“My son has friends from some very wealthy families,” Len explained. “They have met and agreed to become my son’s partners.”

He further instructed me not to lose the buyer from Pittsburgh, but to put him on hold for seven to ten days in order to give his son and the friends an opportunity to put in a proposal.

I met with Peter and his two friends that afternoon. We toured the facility. We reviewed the financial information and the business profile. After that they went away to do their research and to assess their interest in the business.

On Thursday of that same week, one of Peter’s friends called me and asked me to meet with him and the others.

They arrived about four in the afternoon. At least the two friends did. Peter was nowhere to be seen. When I inquired as to his whereabouts, I was told that the two friends didn’t really want to be in partnership with him. They would rather buy the business themselves.

At this point they presented me with an offer. The offer was for the same price as the fellow from Pittsburgh, except that the down payment was $100,000 higher and the note was $100,000 less. I prepared the documentation and arranged to meet with Len on Monday afternoon.

Len and I sat down in his office about one p.m. on that day. The telephone rang. Len snatched the receiver from the cradle.

“I told you I didn’t want to be disturbed,” he yelled into the receiver to the receptionist.

There was a long pause. Then he looked at me.

“The phone call’s for you,” he said and then he threw the phone at me.

I wasn’t quick enough to catch it, so it fell and bounced loudly off of the floor.

When I picked up the phone, I found that it was my secretary on the other end of the line.

“This had better be important,” I told her.

“Well,” she replied, “I have a chap on the phone from Tulsa, Oklahoma. He received the profile from this business about eight months earlier and had passed on it. However, he wants to know if the business is still for sale.”

I arranged for the call to be transferred to me and I spoke directly to the fellow, whose name was Kyle. I told Kyle that the business was and wasn’t for sale.

There was a pause.

“Well,” Kyle said, “make up your mind. Either it’s for sale or it isn’t for sale.”

“As we speak, sir,” I told him, “it is for sale. We have two offers on the desk and within an hour it will be sold.”

There was another pause.

“Hold on for just a second, please,” Kyle said.

I waited for about a minute.

Kyle came back on the line and asked, “Would you wait for twenty-four hours before you make your decision?”

“Why?”

“Well, I’d like to see the business and if it’s what I think it is, then I’d like to put in a proposal. Then you can weigh my offer against the other two.”

“That’d be fine. But how are you going to get here?”

Kyle told me he would charter a jet and arrive at eight a.m. the following day.

True to his word, Kyle flew into the small community airport, along with five other people: his plant manager, an engineer, his accountant, his sales manager, and an equipment appraiser. We picked them up at the airport and drove them to the business.

We gave them the boardroom. They went through the facility. They split up into teams and they eventually called us into the boardroom just after noon. At this point Kyle made us an offer that was $500,000 higher than the other offers.

When I heard Len take a deep breath to say “sold,” I stomped on his foot to stop him.

“Excuse me, fellas,” I told Kyle and his companions, “but we’re going to have lunch. You’re going to have to do better if you want to make this transaction come together.”

And off we went. All through lunch Len was moaning and groaning about his foot.

“Sorry about that,” I said. “I didn’t mean to step on it quite so hard.”

By the time we came back from lunch, the price had been raised a further $350,000. Needless to say, I had one happy client, even though I did have to take him to the hospital afterwards.

It turned out that I had broken his small toe.