I have told the following story hundreds of times during seminars I used to conduct about strategies to use when buying a business. I was representing a seller in a transaction. He was highly motivated to sell due to a family illness and he had a very good business for sale. Plus, he was selling it at a reasonable price and offering favorable terms. It was, in essence a very compelling business and deal for a prospective buyer.
The listing generated a lot of interest from the beginning. One buyer in particular was very excited to move the deal along. After the first meeting, the seller and I both agreed that he came across as a bit of a hard-headed guy however, he had the background to run the business which was very important to the seller, and certainly the financial resources to execute a deal.
Discussions went on for a few weeks.
I attempted on several occasions to tell the buyer that he had to be a little accommodating or at least less aggressive with his comments because we cannot figure out what is really important to him and we want to try to get a deal done. Regardless, he didn’t change.
This went on right up to closing. Obviously, the seller did not give in to each point and negotiations were done despite his “deal breaker” mentality. It became comical after a while because the seller and I knew that nothing he said was really a “deal breaker” at all. Nevertheless, it was a very irritating transaction and the seller was getting very impatient with him.
Somehow, we got to the closing table. With all documents ready to sign, the buyer looked at the settlement statement and saw his attorney fees which were $12,000 because he clearly drove his lawyer nuts as well and took up a lot of his time. He immediately turned to the seller and stated: “You have to pay my attorney fees. If not it’s a (you guessed it) deal breaker.” My seller looked him right in the eye and told him: “You are right; it is a deal breaker, now I won’t sell you the business even if you pay me double.” And with that, the seller walked out the door.
We sold the company shortly thereafter to a wonderful couple who have done a great job running the business. The buyer hounded the seller and me for months with threats of a lawsuit which of course never materialized.
The lesson here is simple:
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