Building trust between business buyers and sellers

  • by Adam Bannister 

Interview with...

Andrew Rogerson, owner and MD of Rogerson Business Services, Sacramento, CA
Topics covered:
How deals break down & building trust in business sales
CV:
Owned five businesses, selling first at x 2.5 original purchase price. Chair of Sacramento Chapter, California Association of Business Brokers, highest business broker accreditation in California
Expertise:
business valuations, transaction analysis, consulting for sellers and buyers & for aspirant franchisees, machinery and equipment appraisals, range of sectors, US and international business
Location:

Sacramento, California
Buying a business

Andrew Rogerson on the most common reasons for deals breaking down...

“There are lots of reasons, sometimes not just one single reason. Often one party is not organised. I see this quite a lot when a buyer or seller isn’t organised, and organisation is important.

It’s a little bit unusual but often feelings get hurt in a transaction. One of the reasons for having a business broker is so they can manage the feeling and emotions within the transaction.

“One of the other reasons a lot of transactions don’t happen is because people just can’t get finance. If I’m working with a buyer and a seller one of the first things I work out is whether the transaction can go forward and if a buyer needs to borrow. I get the banks involved early and make sure the buyer qualifies for finance.”

On knowing whether a party interested in buying a business is trustworthy and genuine...

“I don’t think you really can know. Trust is built over time and it really comes from experience. That’s one of the reasons for having a business broker in the transaction: we know what to disclose at which point in the transaction.

Whatever you offer to do make sure follow through and do it so you can build the trust

“If a buyer asks for a document, for example a lot of buyers want tax returns upfront. One of my processes is to make sure a buyer is qualified to buy the business.

I go through some questions with the buyer and I’ll reveal information that’s appropriate. There are some things that don’t get disclosed until later on in the transaction.”

On building mutual trust between buyer and seller...

“From my prospective trust is earned. Whatever you offer to do make sure follow through and do it so you can build the trust.

“It’s very hard to do this in the transaction because both parties are as nervous as each other, and they don’t want to give away too much because they’re negotiating things through. But trust is very hard to build up in a transaction until you actually close the deal.”