May 13, 2023
Read time: 3 minutes

Price fixation is a common pitfall in small business M&A.

While price is certainly a key piece of the equation, it isn’t everything.

To stand out as the right buyer, you need to lead with empathy.

Appeal to the seller’s emotions.

In today’s issue, we’ll cover 5 practical ways to do that in your Offer Letter:

  1. The Story Arch

  2. Hierarchy of Priorities

  3. Simplicity Wins

  4. Personal Touch

  5. Solicit Feedback

Let’s dive in:

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1. The Story Arch

Early in your Letter of Intent - well before financial terms - share your story.

Answer these questions:

  1. What have you done in the past?

  2. What do you want to do in the future?

  3. How will this business benefit from your past and align to your future goals?

Spend the extra time to make this section interesting.

Here’s an example I pulled from one of our recent LOI’s:

What works?

  • Credibility is quickly established

  • The tone is self-deprecating

  • The background is concise

  • The story is unique

And most importantly, the final sentence speaks to the seller’s priorities:

2. Hierarchy of Priorities

From the outset, your goal should be to understand the seller’s intrinsic motivation.

Variables at play:

  • Sales Price

  • Funding Mix

  • Speed to Close

  • Employee Retention

  • Continuity of Service

  • Personal Legacy

  • Equity Roll

The best way to stack rank these is to ask the seller open-ended questions.

For example:

  1. What would a highly successful transaction look like to you?

  2. Can you speak to the strengths and weaknesses of your employees?

  3. What is your greatest fear about selling?

Once you identify the seller’s goals, cater your offer accordingly.

One way to do this is to add an “Our Priorities” section within the Offer Letter.

Here’s an example:

3. Simplicity Wins

Creative deal structures are key to align incentives.

But when it comes to presenting financial terms, keep it simple.

A complicated presentation will overwhelm most sellers, particularly if they haven’t bought or sold assets in the past.

Earn-outs, for example, are often overcomplicated.

Where possible, use tables to simplify:

4. Add a Personal Touch

My favorite strategy to “humanize” an Offer Letter is to submit a brief, 5-min or less, Loom video alongside the written document.

Here’s an outline you can leverage in your next video:

  • Thank the seller for making time to meet with you (10 secs)

  • Compliment specific attributes of the business (20 secs)

  • Articulate why you are the right buyer (30 secs)

  • Emphasize how your offer caters to the seller’s stated priorities (1 min)

  • Highlight key financial terms (1 min)

  • Summarize high priority diligence requests (30 secs)

  • Wrap up with enthusiasm, energy and sincerity (30 secs)

Most importantly, keep the tone casual.

5. Solicit Feedback

The worst thing you can do after submitting an LOI is to wait around.

Never leave room for uncertainty.

30 minutes after submitting your LOI, give the broker a call.

Ask if they have questions or feedback.

This outreach puts you at an advantage.

Even if your offer price is well below others, the broker will feel obligated to keep you informed.

Potentially opening the door to a counter proposal, if needed.

📚 What Caught My Eye This Week:

To recap, here are 5 ways to appeal to the seller’s emotion:

  1. Share your story and unique qualifications

  2. Identify the seller’s intrinsic motivations

  3. Present financial terms in a simple way

  4. Submit a video alongside your LOI

  5. Call the broker, ask for feedback

You may be surprised what likeability will do for you.

Reply to this email with any questions.

Happy Saturday folks,


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