May 27, 2010

Could we see your bedroom?

We don’t have to show all that we have to the potential acquirer of our company at the beginning of our communication. On the contrary, it is better to supply information slowly within a certain plan. If we give too much information too quickly, then the potential acquirer might reach erroneous judgements as a result of not being able to assimilate the information we have given. Don’t we follow such a course of action also in our social lives? We don’t explain all of our past life to someone we have just met. We give that person additional information about ourselves as our relationship develops.

Of course, the company with whom you have started a relationship would not object to to receiving additional information about you. Moreover, as you give additional information, they will want to learn more because almost each information you supply leads to new questions. It is very important that you have the control of the timing of the supply of additional information and that this control is not passed on to the potential acquirer. I believe that you wouldn’t want to expose all of the details concerning your company to a potential acquirer, who may not in the end purchase your company shares.

The most effective method in limiting the supply of information to the potential acquirer is having created competition in the sales of the company shares. In other words, it means that you have more than one potential acquirer. Such a situation ensures that you have the control of the flow of information and also that the negotiations are made between equals.

When there is only one potential acquirer, then the potential acquirer is in a position to put pressure on the seller. However, in the case of more than one potential acquirer, then the seller is in a position to ask for additioanal information from each potential acquirer and to apply pressure.

It is better to spend some time in your living room and better still to see the living room of the other person before you show him your bedroom. And there is nothing wrong in seeing other living rooms too before you go to the bedroom.:-)

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