8. First Contact Between Seller and Buyer

The initial discussion is primarily about the seller and buyer getting to know each other, introducing themselves and their companies, exploring common goals and framework conditions, and mutually answering questions. This is a first meeting at which theoretically no negotiations take place. However, in reality, sometimes even unintentionally, the foundations for later contract content may already be laid. Preliminary deposits are often proposed by the potential buyer, and concessions from the seller are requested. A well-informed seller will not make a hasty rejection or agreement with what is proposed, but takes time to reflect in order to reach the right decision.

Sellers sometimes tend to deliver lengthy monologues praising the company's existing strengths, justifying its weaknesses, and always referring to assumed business potentials. However, none of this is required at this point and does not contribute to building trust. Buyers usually prepare well for meetings and are often more experienced in asking questions than sellers, as they have often been through several such meetings. They may also be partially interested in the business value itself, because they are motivated and the company for sale interests them.

Sellers should answer the buyer's questions completely without emotion, factually, without taking them personally, without being evasive, and without distorting the requested information or concealing skeletons in the closet. Such aspects would be raised in subsequent negotiations anyway. If the buyer is forced to terminate the purchase process after a certain period due to untruthful information provided by the seller, this may have unpleasant consequences for the seller or their consultant.

On the other hand, a willing seller should take the opportunity to gather as much information as possible about the potential buyer. In this context, this mainly concerns their personal abilities and experience, ability to deal with employees, financial capabilities and financing options, their time expectations and availability, motivations and goals, and their business planning. The last point is particularly important for investment companies and competitors.

In the case of beginning entrepreneurs (investors), one should ask whether they truly want to relocate, potentially moving closer to the business being purchased. The answer should always be verified for credibility -- this particularly concerns questions related to school-age children, spousal consent, and selling the current property. This question is usually answered positively. However, practice looks different. If start-up entrepreneurs receive a competing offer from their area just before signing the purchase agreement, they often accept it, even if it is frequently less favorable, to avoid moving. In the case of (especially larger) companies and groups, the important question is what the next steps might look like, which internal bodies must approve the purchase, and what additional documents will be required. Requirements are often so excessive in scope, type, and quality that a typical medium-sized company would barely be able to meet them, for example due to workforce, know-how, or controlling limitations. And last but not least, there is the question of future management. A sale often only occurs after the investment company has secured a qualified CEO or middle management for the company being acquired.

The first meeting lasts approximately 2 hours and concludes with a tour of the company being sold. A statement from the potential buyer along the lines of I could imagine... is expected. However, such a vague statement should by no means lead to the termination of negotiations with other potential interested parties, and it would be a cardinal error to end other negotiations. Usually, the meeting concludes with an agreement on the next steps.

The main output is information about whether negotiations will continue, what the timeline will be, by when both parties will mutually provide the requested information, when additional questions will be submitted, and when the next meeting for deeper discussion will take place. Ideally, an agreement is reached that the potential buyer will submit their offer reflecting their price expectations by the agreed date, or will communicate that they are ending further negotiations.