An advisor recently wanted some advice about selling his independent firm. He said he had read that the key to successfully buying or selling an advisory business is to know what you want. Then he rattled off his “want” list, and asked me if he’d left off anything important.
I too had heard this conventional wisdom about advisory M&A too, and generally believed it. But in that moment, with the advisor stating it with such certainty, I realized there was a better way.
My answer surprised me. “Instead of going into negotiations to sell your business with lots of ideas about how you want it to work out, try sitting down with an open mind and just listen to what the other party has to say.” Not surprisingly, he was less than impressed.
Yet, the more I think about it, the more my off-the-cuff response seems like the best advice. Here’s why: When we sit down to a meeting “knowing” what we want, it blinds us to other possibilities. We’re so focused on “getting” what we want that we usually don’t stop to consider other ideas. I know this may come as a big shock, but sometimes other people have good ideas, too.
That doesn’t mean you shouldn’t have your ducks in a row when you sit down to the negotiating meeting, but you should never sit down for that final meeting until you are ready. And part of “getting ready” is to explore all the reasonable possibilities.
Therefore, when you go into that initial M&A meeting — whether you’re the potential buyer or seller — go into it with an open mind. Don’t be so focused on what you want. There will be plenty of time to figure that out later. And try not to say any more than you have to. (I know, that’s hard for me, too.)
Instead, look at that first meeting as an opportunity to find out what the other folks are thinking. Consider it a learning opportunity. Ask a lot of questions, and really listen to the answers. Ask follow-up question and learn as much as you can.
Try not to form any opinions about what you hear, and be careful not to reveal them, if you do. Again, there will be time for that later — if you get to that stage.