I used to love watching the TV lawyer, Perry Mason. He solved every case with a combination of smarts, luck, and guile. Each episode concluded with a shocking surprise that revealed the real criminal. Perry won every case.
Each episode had a cast of characters from which the guilty party would always emerge. If there was ever a theme to how you figured out who was guilty, you’d look for motive. Which character might have had a motive to commit the crime? Finding motive was Perry’s key to success, every time.
Motive is also key when selling a business, especially if it’s a good business. A prospective buyer is always nervous about why the owner of a good business would be selling. The unstated subtext of a buyer’s thinking is something like this, “If this is a good business, the owner must know something troubling about the future that’s causing him to sell now.”
I spend a lot of time with my business owner clients to understand their motive for selling. Oftentimes, the first reason they give me isn’t their real reason. At times I feel like Perry Mason as I subtly dig to learn the real motive. Whether the seller is 75 years old with a scary health diagnosis, or a millennial tech wizard, I need to know how they think deep down about the future of the business. If I detect that their motive is even loosely rooted in fear about the future, it will affect how I think about valuation and marketing strategy.
Here’s why … I’ve seldom done a transaction when the buyer doesn’t ultimately figure out the seller’s true motive. In all the conversations about deal structure, due diligence, and the like, the seller will ultimately express to the buyer their real motive for selling. If that motive is inconsistent with how I’ve communicated motive in the marketing documents, the deal will almost always come to a halt or lead the buyer to renegotiate the price.
Just like a good Perry Mason case, understanding motive is key when selling a business. If the seller waits too long to express it, the surprise ending isn’t always a happy one.
JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee.
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