Non Genuine Buyers Beware
Have you ever tried to sell your practice or endeavoured to assist a client to sell their business? If you have answered yes to either of these questions, it’s highly probable that you have encountered a tyre kicker or two. How do we define a tyre kicker? Well I’m not sure what the official definition is, but these type of people are typically characterised by someone who really doesn’t have a genuine interest in buying your business or negotiating a reasonable deal. To be honest, you want to spot these people as soon as possible to avoid wasting your time and limiting your frustration.
However, we do need to keep in mind that there’s probably a fine line between being well informed about current market conditions and what makes a reasonable sale, and someone who is endeavouring to achieve a good acquisition outcome for their firm, irrespective of how it compares to market. From our perspective, a happy vendor and purchaser is a great outcome. It’s all about trying to find a win-win deal for both vendor and purchaser rather than trying to ‘screw the last cent’ out of either party. However, it’s also about being genuinely in the game for an outcome. No-one likes a time waster.
Nevertheless, as most business/practice brokers, as well as anyone who has tried to sell a business or practice, there are some tyre kickers out there that want to waste the vendor’s time with completely unreasonable and unrealistic deals. They are in search of a bargain! These type of people are demanding on time and want everything yesterday in terms of data and responses to their queries. They will also want to schedule in multiple meetings, get as much information as possible so the vendor gets all excited, only to put forward an offer or counter offer significantly different to the asking terms and conditions. Now, that’s not to say that the T & Cs requested by the vendor are always fair and reasonable. However, experience suggests that the offers put forward by the tyre kicker are generally so far off market it’s not funny. Dear Mr or Mrs Tyre Kicker, I hate to tell you, it’s currently a vendor’s market, so bargain deals are few and far between.
Furthermore, I would encourage you to think about how market unrealistic offers will hamper your future acquisition opportunities. Keep in mind, the industry talks. If you are someone who is on the acquisition trail but is perceived as a ‘tyre kicker’, word will get around and as a result you will often miss out on some sensational opportunities because the vendor or broker will simply not deal with you. If you want to seriously compete in the acquisition market, you don’t need to necessarily be generous; however you need to be fair to be offered a spot at the negotiation table.
As mentioned, there is a fine line between someone who doesn’t really understand or know the market and someone who is trying to make a bargain out of every deal. As a buyer, if you are finding yourself missing out on deals, perhaps it’s time to find out why and do some research on current market conditions from people in the know because tyre kickers are not welcome by vendors or brokers.