Is Your Acquisition Offer A Fishing Trip In Disguise?

Bowen had received a non-binding letter of intent from a global bank, who made their $37 million bid with no actual intent to buy his business. Bowen came to believe their offer was a decoy designed to disguise their real objective: to understand Bowen’s strategy so they could compete better with him.

When John Bowen received a $37 million offer to buy his wealth management business, he thought it was too good to be true.

As it turns out, it was.

Bowen had received a non-binding letter of intent from a global bank, who made their bid with no actual intent to buy his business. Bowen came to believe their offer was a decoy designed to disguise their real objective: to understand Bowen’s strategy so they could compete better with him. Bowen got wise to their strategy and ended up selling his business to another buyer, Assante Wealth Management, for $25 million.

During our recent interview for my podcast, Bowen reveals his three strategies for evaluating the authenticity of an offer to buy your business. For example, if the acquirer’s corporate development team is not at the negotiation table, chances are they are on a fishing trip and they are using an acquisition offer as their bait.

Professional acquirers have in-house corporate development professionals whose job is to buy businesses on behalf of their employer. They also have line-of-business employees whose job is to run the various divisions of the company. The corporate development team usually runs a professional acquisition with input from their line-of-business counterparts, not the other way around.

If you find yourself in an endless series of meetings with line-of-business representatives, and the corporate development people have dropped off, chances are your acquisition offer is nothing more than bait on your competitor’s hook.

Bowen tackles the other key tell-tale signs that a company is on a glorified fishing trip during this Built to Sell Radio interview.