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What Should You Do When You Encounter a Silent Buyer?
By Mark Daoust
Do you hear that? It’s the sound of somebody thinking. And when you’re trying to sell your business, the sounds of a silent buyer thinking is absolute torture.
The power of silence as a tool is well-documented within a traditional sales process, with a whole psychology built up around the concept. Experienced sales people know how to use silence, and how silence can be used in a way to motivate a prospect into making a buying decision.
But the process of selling your online business is more complex than most other sales processes. While most sales processes have one single decision point, selling your business is a series of decision points, and commitments from your buyer.
Depending where you are in the sales process, silence can either be a good sign, or a sign of potential trouble. It’s then up to you to figure out which one it is in your case.
For this article I want to focus on what silence means after a buyer has initially committed to buying your business with a Letter of Intent (LOI).
What a Silent Buyer In Due Diligence Could Mean
Silence in due diligence is not always a bad thing, so don’t immediately assume the worst. However, if your buyer is suddenly silent for extended periods of time, you do want to pay attention to that and be a bit proactive.
The guys over at SpiroHQ call this silence “ghosting”.
Ghosting is a frequent occupational hazard in sales – everything goes well with a client, you’re getting positive vibes, then they disappear…To fight ghosting, you first have to know what causes it. (emphasis added)
Fortunately, it is somewhat easy to narrow down the reasons for silence after an offer has been accepted. In most cases, a silent buyer means one of three things:
The Buyer Is Working
Due diligence requires a buyer to process a lot of information. When you dump information on the buyer, you should expect a period of prolonged silence as they work through that information. Plus they have their day job to do.
It’s not uncommon for a buyer to receive dozens upon dozens of bank statements, merchant statements, and credit card statements through a normal due diligence request. Processing this mountain of paper takes time and effort. In addition, a buyer may be using the assistance of an accountant or attorney to help them. So the silence could also be them waiting for somebody to get back to them.
The Buyers Are Having Trouble
If you are in due diligence, your buyer has committed to working with you. So extended periods of silence at this point could be a sign of trouble. While it’s normal for a buyer to go silent after receiving a data dump, if that silence extends beyond several days, it might be time to take some level of action. If the information you provided the buyer is not matching up with what they expected, silence can be a natural reaction as they try to make the information matchup.
The Buyer Has Cold Feet
One of the most common reasons for silence by your buyer, who was once all in on your business, is cold feet. Submitting an offer is relatively easy. Once you start to do due diligence, and work on the final purchase agreement and transition agreement, the reality of spending six or seven figures on your business begins to sink in. This can easily cause cold feet.
But how do you know which reason is the cause of your buyer’s silence?
To figure this out, you need to contact them. But you want to be careful as to how you do this.
How You Should Handle Silence In Due Diligence
Knowing how to approach your buyer about the reason for their silence, can be the difference between losing the deal and potentially saving the deal. If the deal is truly in trouble, and the buyer has difficulty in verifying information or has cold feet, being proactive will help you save the deal before the buyer finds a reason to back out.
You don’t want to approach them in the wrong way, as you will then run the risk of scaring them off or making them feel pressured. A buyer who feels pressured will be more inclined to break the deal.
So if you run into extended periods of silence, I recommend that you follow the four following guidelines:
Give The Buyer Ample Room To Review Materials
After doing a data dump, give the buyer ample time to review the materials. For example, if you dump 36 months worth of bank statements on the buyer, give them a few days to process that information before asking how they are getting on.
Due diligence takes time. In traditional brick and mortar style businesses, it isn’t uncommon for the due diligence phase to take 60 or even 90 days.
Since most online businesses tend to have fewer moving parts and thus fewer elements to inspect in due diligence, the process usually takes significantly less time (14-21 days in most cases for a moderate to large website).
If you jump the gun and start to pester a buyer before they can reasonably review your due diligence materials, you risk coming across as pressuring. Buyers have a sensitivity to sellers who pressure for quick decisions.
Given that your buyer intends to write you a significant check for your business, they deserve the space to inspect what they are buying, even if waiting is difficult.
If It Is Unusually Quiet, Send a Polite Email
If you haven’t heard any updates from your buyer for several days, or even a week or more into the due diligence process, there is nothing wrong with sending a “checking in” email.
When you craft this email, be sure to follow a few guidelines:
Offer Your Assistance
It is rare to have a straightforward and perfectly clean due diligence process. One reason for this is that the buyer does not have your perspective. So what might be clear to you might be confusing to the buyer. Always offer to walk your buyer through confusing elements.
Be Open To Being Wrong
Mistakes happen. I have been party to many due diligence processes that uncovered accounting errors on the part of the seller. Be open to being wrong and understand that this might cause a change in your deal.
Ask For An Update, Not a Conclusion
In your first few emails, don’t rush the buyer into closing out any part of the due diligence process. Just ask for an update. However, if you work on a deal for several weeks, asking them for a deadline is perfectly acceptable.
Suggest Weekly Status Calls
It can be easy to think of buying and selling websites as a mere transaction based on numbers, data, and statistics. But the reality is different: you have to consider the relationship with the other person.
When a buyer and seller agree on an acquisition, they essentially enter into a partnership. So it is helpful for both the buyer and seller to grow comfortable with each other during the due diligence process.
I always recommend buyers and sellers set up weekly status calls to monitor the due diligence process, to allow the buyer to ask the seller new questions, and to allow the seller to uncover any difficulties the buyer may have in verification. These calls also serve the purpose of forming a solid working relationship before closing the deal.
As an added bonus, you can use a conference service or even Skype to record the calls. This can be useful training materials for the buyer after the closing.
Conclusion: Silence Is Powerful & Potentially Dangerous
Silence is a powerful tool in the process of selling your online business. Even though silence is the absence of direct feedback, it can also be a powerful form of feedback.
Depending on where you are in the sales process, silence can mean a variety of things. While you do not want to pressure a buyer when they are simply working through the rationale for completing the deal, you do want to be proactive if a buyer’s silence means they are having trouble.
Finding out what’s going on requires diplomacy, tact, and charm. To act otherwise will see your deal running off into the sunset never to be seen again. So when you are convinced that silence is becoming a liability, get a window into your buyer’s thought processes by following the tips laid out here. It may mean the difference between a large check and a large amount of disappointment.