How To Deal With £1 Charlies From The DealAcademy (& Other Fake Business "Investors")

£1 Charlies are business buyers who pretend to be funded buyers but who use a variety of tricks to take ownership of a business virtually for free, without investing any of their money, and usually by cheating the vendor. £1 Charlies can be very sophisticated in their execution.

This article exposes "tips" taught at one of the numerous companies running courses on "how to buy a business, and quotes from their podcast. The company in question here is called The DealMakers Academy (TDA) and it's owned by an ex-marketer turned "M&A guru" called Jonathan Jay*.  Below are a few examples of what's taught and, importantly, ways a seller can protect against them. 

Added 2024: For quality and honest articles on how to buy businesses, Richard Parker offers excellent free articles on his site. There's no need to pay an "M&A guru" thousands of pounds for his course. 

*Read our review of Jonathan Jay's, and numerous other such courses: The truth about Business Buying Courses.

BUT THERE'S NOTHING WRONG WITH THE £1 DEAL!

In principle, no, there's nothing wrong with the £1 deal. If a business is a distressed business, or insolvent, a buyer may offer £1 and ...well, it's probably a fair deal.

However, £1 Charlies are not looking for distressed businesses. Typically, they're looking for solid, established, profitable businesses that are worth a lot of money. They approach the business owner pretending that they are funded, that they are wealthy investors, and that they have an interest in buying the business. However, their goal isn't to invest their money at all!

It's about using other people's money - loans, credit etc.

And there's nothing wrong with that either ...if you, the seller, get your money! But you won't. More later.

£1 Charlies have a lot of sophisticated ways to wrest business control and ownership without paying for it! They have "structured deals" and "consultancy agreements" and all kinds of other clever and crafty tricks up their sleeve. Those who don't know what the tricks are highly likely to fall victim to them! That's almost every single seller of a small business who has not had proper advice through the transaction. Many vendors have lost the entire value of their business! There are literally thousands and thousands of cases in the UK alone.

THE MODUS OPERANDI #1

One type of "structured deal" often proposed by £1 Charlies is where they offer part of the purchase price up front and balance in instalments (deferred payments). Some even offer security for those deferred payments. That all looks very good, but here's here's where it gets interesting!

The money they are paying up front is yours, not theirs! They intend to borrow it using the assets of the target business as security - YOUR stock, YOUR debtors, YOUR other assets! They want to put in not a penny of their own money. They are not borrowing any money. On the date of sale they borrow money in the name of the target business, load that business with debt and use that money to pay the vendor.

But that's okay, the vendor is getting paid, right? Wrong.

The money they borrow is to pay just an advance on the purchase price, not the whole amount. They expect the vendor to take the rest in instalments over several years. What about security for the 'deferred payments' (which is akin to a loan the vendor is giving the buyer)? They'll typically offer the now heavily debt laden (and probably worthless target) business as security.

So, effectively, they've invested none of their money, they now own the target, the vendor got a small payment (that s/he could have organised themselves if they wanted to borrow against the assets of the business) and the vendor has pretty worthless security to cover the 'loan'.

If the buyer has no skin in the game, if he's not got a substantial sum of his own money at risk, he's worth avoiding. In fact, most deals with these parties never get to completion. The vendor spends a lot of time, and probably pays fees to lawyers etc to draw up contracts, and loses all of if (when!) the deal collapses. These deals are notorious for collapsing before getting to completion because of the numerous lenders and other parties involved any one of whom could pull out and jeopardise the completion!

THE MODUS OPERANDI #2

Deferred payments is not the only way these acquirers "structure" deals to their advantage. In talking about a hypothetical business that's worth £300,000, The DealMakers Academy podcast advises buyers to structure part of the deal as a regular consultancy payment to the seller.

They suggest that students offer to pay part of the purchase price in the form of a "consultancy fee". The idea is that if they've agreed, say, £500K for the business, they should pay a small amount, say £50K, in cash and pay the rest in the future via employing the business owner as a "consultant", whether or not that person continues to provide any service to the business. They'll tout the tax advantages and other advantages of such a structure.

They advise students to tell vendors, "Let's say there's a consultancy fee where we pay you £500 a day and we pay you for a day a month for the next 3 years ...that's £18,000....Let's make it a bit more exciting £2,000 a day ... that's £75,000". They make it look like an attractive option.

Then they advise their students, " ... don't forget you're not obligated to use the consultancy, it's a consultancy agreement that can be terminated by either side".

Wink, wink.

So, effectively, they're offering to pay 90% of the price, in a post sale arrangement, in the form of a regular consultancy fee but one in which the small print says they can terminate the agreement and stop paying the seller whenever they want!

"(It) can be terminated by either side". They'll make a big deal about the "either" being fair. But as a seller you have no incentive to terminate an agreement where someone has promised to pay you money! No, it's not "fair" that it can be terminated by either side.

What are the chances that the buyer will continue making a regular payment for the next 3 years when he can terminate the agreement at any time, without any reason, after ownership of the business is transferred to him? It's next to zero.

THE MODUS OPERANDI - To Infinity

There are numerous other aspects of "structured deals" that result in the business seller losing money! See the advice in the "Conclusion" at the bottom of this page with respected how to respond to an offer involving a structured deal.

Bear in mind that £1 Charlies pay over £10,000 to attend a full course from The DealAcademy, for example. And there are other £1 Charlie coaching schools. £10K is a lot of money. You don't pay that kind of money to learn a five minute trick. They pay that to acquire a lot of good but also shady techniques and tactics to use against you!

WARNING TO OWNERS OF SMALL BUSINESSES

Many small business owners think they are too smart to fall for a £1 Charlie, but even some of the smartest ones have ended up losing their businesses and getting nothing for it (or only a small portion of the agree price).

Because no matter how smart the vendor, the game of buying and selling businesses is completely different. There is a ton to know and the vendor is at a distinct disadvantage against financially sophisticated buyers.

£1 Charlies come in all shapes and sizes. Some are individual operators, some are large, established companies. For example, the UK's self proclaimed "4th Largest Nursery Group", operating under the umbrella of "Welcome Nurseries" persuaded several owners of day nurseries to sell their nurseries to the group under all kinds of "structured deals". Incidentally, Welcome Nurseries was owned by the same person who owns The DealMakers Academy..

Nursery owners sold their nurseries without getting all their payment up front because, well, Welcome was a "big, established, serious looking group", a group that was making noises about getting private equity funding to propel them to the #1 largest nursery operator in the UK. People assumed they were stable. They assumed their "deferred payments" were secure. They were wrong. (Later in this article are tips on getting proper security.)

After many nursery owners sold their nurseries to the group, the group went into liquidation in August 2022. Below is an image of nursery businesses that were sold to them and how much each of the previous owners of those businesses lost when Welcome went bust. (Source: The administrator's report published at Companies House.)

Welcome Nurseries is the small tip of a giant iceberg. Businesses in other sectors have lost money under deferred payment arrangements they reached with all kinds of £1 Charlie buyers.

But you can protect against this happening in two ways: 

• Researching and researching articles like this one and
  
• Using the assistance of an expert (I'm available for consultancy and you can contact me here)
  

For more of my tips on buying / selling businesses, follow me on LinkedIn)

- Clinton Lee

TIP #1  THE IMPRESSION MATTERS, BABY!

At The DealmakersAcademy podcast, they advise wannabe business buyers, and I quote the owner Jonathan Jay, word for word: "What you should never do is disclose that you're looking to buy the business on deferred payments or you're going to borrow against the company's assets ....never, never, never...the impression you must give is that you're a multi-multi-million pound entrepreneur."

The "impression you must give", of course! You must give the impression that you're rich because that suggests you're looking to buy the business for money when in reality you want to "buy" the business for nothing.

He adds, "You might say, 'we have recently exited some investments'." (ie, "I've got money!").

The vendor's job is to weed the £1 Charlies out early on. Later in this article are suggestions on how business sellers can do this by, for example, custom modifications to the non-disclosure agreement (NDA) that they get the buyer to sign.

If they try the line that they've "recently exited some investments", bingo, they've dug a hole for themselves!

The vendor can insist on proof that they recently exited investments. They will go all coy, they'll try to duck and dive. It would be reasonable for the vendor to then take a stand: "I need you to prove credibility. You state that you recently exited some investments. Provide proof. If you've completed the exit, there aren't confidentiality matters getting in the way of you disclosing the name of the business as Companies House will have a public record that you are no longer a PSC (Person with Significant Control) of that company. I'd like to verify this myself."

They will use excuses that they are under NDAs and can't disclose that information, or they'll come up with some other excuses.

If there is some reason they are unable to share, with the vendor, the name/s of the business/es they sold, the vendor could suggest they share this with a trusted accountant or lawyer, under an NDA. The accountant/lawyer can confirm to the vendor whether s/he's satisfied with that proof.

If it turns out that they won't do that either, it's highly likely that they didn't exit any investments. The vendor's best course of action then is to dump them! The earlier a vendor removes a £1 Charlie from contention, the better.

The problem that most vendors have, and this leaves them highly vulnerable to scams, is that they are too reluctant to drop buyers, even when the buyer has demonstrated that he's a liar and/or that he lacks the credibility to complete the deal.

A business seller can also check a prospective buyer's companies at Companies House. How long have their businesses existed? Have they filed many years' worth of accounts and do their balance sheets show millions in the bottom line? £1 Charlies tend to have brand new businesses with no history of filing accounts.

Any fool can set up a new company with a fancy name like Westminister Investments & Private Equity Ltd. Many £1 Charlies do just this to give the impression they are serious players.

One other check vendors can do is to visit the person's profile on LinkedIn / other social media and go through their past posts, and likes, over the last year or so.

Have they liked or commented on posts from those running £1 Charlie courses - the Jonathan Jays, Carl Allens, Jeremy Harbours etc., of this world? (A list of some of the main courses and the names of the main players can be found here.) If so, they probably attended one of those courses and/or are fans of the "gurus" running these courses.

TIP #2 - THE NON DISCLOSURE

Normally, when a buyer first approaches a seller, or the business broker handling the sale of the seller's business, the buyer has to sign an NDA, a confidentiality agreement, before he's given details of the business.

Business brokers have standard NDAs they send out, but vendors selling a business themselves, and for the first time, are unlikely to have an NDA template to hand.

In his podcast #7, The Dealmakers Academy advise wannabe buyers: "What you need to do is - you need to initiate the Non Disclosure Agreement....This shows you know what you're talking about, you are going to treat the whole thing professionally and that you know more than they do, which is a powerful psychological position to put yourself into".

These buyers believe that by having an NDA to hand, and sending it over, they get a psychological advantage or at least convey that they are seasoned players who know what they're doing (this will come in handy for them later when they attempt to "teach" the vendor how businesses are valued and why the vendor's valuation isn't 'accurate').

The podcast goes on to describe an occasion where the speaker sent the wrong NDA back to an accountant handling a sale. He says, "By accident, last year I sent the wrong NDA back to an accountancy firm and he called me back to say ...'it's for a different project' and I said, 'I've got so many going on at the moment'."

Fair enough, if you do have many target businesses you're considering, it could be an honest mistake where you send the NDA for Business A to Business B's accountant / business broker.

But he goes on to say, "It was an accident but I thought, you know what 'that's an accident worth repeating'.'".

That was followed by lots of laughter in the audience. And there were, no doubt, some in the audience actively scribbling this idea down.

The message he was trying to convey: It might work to your advantage if, as a buyer, you give the impression that you're working on many deals, even if that's not remotely true.  "It's an accident worth repeating" because, in their words, "no (seller) should think they're the only deal in town".

They also advise practising in front of a mirror what you're going to tell the vendor. "The key to all of this is self-confidence," apparently.

I'm sure it works with some sellers. Stand before them with enough confidence and talk about having exited some big investments and they may fall for that line if you're confident enough.

Back to "the accident". How can a vendor deal with a buyer "accidentally" sending the wrong NDA and claiming it's because he's got too many potential deals he's juggling at present?

Simple.

Telling him you won't deal with him right now as he seems too busy at the moment does work like a charm! A good follow up is to insist on having only someone focused on the deal, not someone juggling half a dozen other deals where no one deal is of any significant importance.

It's a gamble, sure. What if he walks away?

The truth is that buyers who try a line like that probably have no other deals on which they're working! It's not easy for investors to find good targets in the ton of junk out there. Claiming to be juggling numerous potential opportunities is just posturing and a big, fat lie.

The buyer will come back. When he does, the vendor is now in the driving seat given the pre-condition laid down that he doesn't want to deal with someone juggling multiple deals. That he has returned mean that this target is the only game in town for him! You know it, he knows it.

But the vendor never needs to disclose whether or not he's dealing with just one buyer. The vendor now has the advantage!

How often does this work? I've had numerous buyers trying this trick with me. On every single occasion I sent them away to clear their existing cases first. The buyer always came back!

There is nothing so powerful as walking away.

One other suggestion: A vendor should never accept the buyer's suggested NDA template. The vendor needs to have their own NDA ready, and it needs to have specific clauses to weed out £1 Charlies, but more about that later.

TIP #3 - THE "ARRANGEMENT"

In one of the above mentioned podcasts, they tip buyers off on a good question to ask: "If we were to come to an arrangement, what would your ideal time scale be?"

Simple enough question and a not unreasonable question at first sight. The buyer wants to have some idea of the seller's time frame, right?

Wrong.

The important word in the question is not "time", it's "arrangement".

As they say in that podcast, "ARRANGEMENT is a great word. Not 'if I were to buy your business' or 'if you were to sell your business to me'."

They continue, "None of those hard words that start to create a little bit of a reaction in people that this is a sales process. These are all SALES terms and you want to de-sale the sales process!"

Why the distraction away from "sales"? Because in a sale you pay your money and you take your product away ...but the £1 Charlie doesn't want to pay any money!

The typical seller does not want "if we were to come to an arrangement". They want the conversation to be about "if we can agree a price".

The seller's response could be that "arrangement" is a harsh word. He could be cheeky and tell the buyer, "Saying 'arrangement' suggests you want to de-sale what's really a sales process. That makes me sad".

"I'm not looking to come to an 'arrangement', I'm looking to find agreement on price first."

It's like when you're dealing with a cold caller on the phone. He's got a  script, he's got a list on his screen of all the things people say in response to his questions and how best to deal with each response. But try asking a cold caller a question he's not expecting, a completely out of the ball park question, and that puts him off his stride.

When someone's playing a vendor based on a script he's learnt somewhere, the vendor needs to throw him off his stride.

He does that by not answering the buyer's question about time frames. Instead, he asks him to repeat the question replacing his harsh words with kinder ones that are more representative of the transaction!

He could even say it with a laugh, half-jokingly. But the buyers needs to, however subtly, realise that this is a sales transaction and what the vendor wants in exchange for the business is money, not a fancy deal structure.

TIP #4 - THE "POISON PILL"

A particularly effective tactic is for the seller to insert a poison pill into the NDA itself.

Using any standard Non Disclosure Agreement, the seller can add a little extra clause that will not bother any genuine buyer but will annoy the hell out of a £1 Charlie.

The clause says the buyer is agreeing that no offer he makes for this target will contain less than 50% of his own money paid on completion i.e., that he's going to be investing his own capital to the extent of at least 50% of any offer he forwards.

If he's a £1 Charlie, he is a character who doesn't want to use ANY of his own money. Nothing wrong with that in principle. But he should be honest about it from the start, not pretend to be looking for an investment when what he really wants is to get something for free.

The poison pill has worked for me against numerous £1 Charlies, including a well known seller of £1 Charlie courses! He got livid that he was effectively being flushed out as a £1 Charlie.

Oh, there's something else.

At the above mentioned podcast, they say that the buyer should do some mystery shopping and call the target business up at different times. It also suggests extracting information from the seller's staff by having a chat with them. Apparently, they say, if the buyer builds some rapport with staff, and digs properly, staff will tell him, "it's been really quiet this month" or "they made 3 people redundant last month".

Hmm.

If you have an NDA, it probably expressly forbids the wannabe buyer speaking with your staff!

I don't know whether the advice in this podcast is for buyers to violate the NDA or whether it relates to cases where there is no NDA / a poorly worded one, but...

Vendors need to ensure their NDA has very clear clauses against the buyer speaking with staff. That's not enough on its own. These buyers are essentially dishonest characters so may get someone else to speak with the staff on their behalf. A properly worded clause should exclude this as well. However, a caution: No clause will stop a dishonest buyer from completely violating the NDA and contacting staff of the target business.

Reminder: never accept an NDA drawn up by the other side, draw up your own NDA.

TIP #5 - MY INVESTMENT WEBSITE

When buying a business, the buyer digs deep into the target's accounts. The vendor has to share a lot of highly confidential and commercially sensitive information.

So it's normal to first identify whether he has the capacity to proceed with a transaction and to confirm he's not just working on behalf of a competitor to do some prying. One way is to ask for proof of funds.

Experienced buyers, and genuine buyers, tend to have no problem with this. They'll provide either a bank statement or a letter from their accountant to say that they have liquid funds, and disclose the amount.

£1 Charlies on the other hand either deflect the question, feign outrage that they're being asked the question, or they provide a pretty meaningless letter from a finance house saying something like "funds will be available for the right deal" (which means absolutely nothing)!

That's not what a vendor wants.

There's no reason why the buyer can't share his bank statement. After all, the vendor is going to be providing the target's bank statements for the last several years! Irrespective of what the buyers says, it's normal in M&A for buyers to provide 'credential' documents like proof of funds.

If he gets outraged that he's being asked to prove himself / his funds / his credibility, he's likely £1 Charlie!

In the above podcasts, they advise students how to reply if asked for proof of funds. They are taught to deflect the question with, "I realise that we've never done business before...so I'll send you a quick link to my investment website & my LinkedIn profile so you know who you're speaking to."

That's great, but those don't constitute proof of funds! These are destination pages that can be full of fluff, unproven claims, fake "credibility". Where a buyer is trying to impress a seller with fake credentials, it's to compensate for the lack of real credentials.

Their "INVESTMENT website" is likely a one page WordPress site that proves nothing. Anybody can put one together in a couple of hours even if he's never used WordPress before, but "investment website" sounds impressive, doesn't it? It'll probably have a cliched photo of London city, or a well known commercial building like the Shard, to make it look like a city firm.

Do not be impressed by the graphics on the website. Do not be impressed by the names of the partners / directors on the site, nor in their impressive looking profiles. That can all be faked! Look for a portfolio ie. a list of businesses in which that company invested... and investigate those businesses. If you find none listed, it's likely this is not the "investment company" that it purports to be!

With respect the LinkedIn profile, it may be filled with a lot of fakery as well - big claims about being an M&A expert or having made numerous investments.

To cover up the fact that they want to pay NO money out of their pocket to buy the business, the above podcasts suggest buyers use this line: "We are reviewing several opportunities and we came across this one on your site..and this actually fits our investment criteria".

"Our INVESTMENT criteria"!

Again, big words. Be on high alert for smoke and mirrors where facts should be. Anyone can come up with "investment criteria", but is this someone who can prove he's capable of making an investment in the first place?

Having an "investment criteria" document is no excuse for the buyer not providing proper credibility documents. If he's not able to provide any, my advice is to drop him immediately. A "no buyer" situation is better than a "bad buyer" situation!

TIP #6 - DEFERRED PAYMENT

In podcast #9 above, they have a guest talking about buyers persuading sellers that if they get a large pot of money in exchange for their business they'll just spend it, but if they're getting a regular payment per month that could be better for them.

Some £1 Charlies do try that tactic - presenting that the vendor can earn even more from the sale of his business by taking a regular monthly payment instead of a lump sum on the day of sale..

They'll explain in great detail how they can pay a much higher price business if the payment is on deferred terms

There's nothing inherently wrong with deferred payments per se. A lot of businesses are sold on deferred payment terms. But I strongly advise not engaging in this kind of a deal unless there's a good accountant and M&A lawyer advising through the whole process!

Any promise of paying in the future is only as good as the security / collateral being offered for what is, in effect, a loan the vendor is giving the buyer.

The vendor is handing over his entire business now on an understanding that the price will be paid later; that's a significant loan from seller to buyer. A loan needs to have three things

•     A reasonable interest rate;
•     Rock solid security in case the buyer defaults on the payment (as most £1 Charlies are likely to do) and
•     A proper agreement drawn up by a lawyer who understands M&A deals.
  
  £1 Charlies typically don't like giving any security that is actually worth anything.

What's good security?

•     If he's a wealthy individual, and that's been independently verified, one can require him to provide a PG (Personal Guarantee). Note: PGs are not a 100% guarantee of anything - there are ways he can wriggle out of a PG;
•     Alternatively, he can give provide a first charge over his family home; 
•     He can also provide a bank guarantee.

If he's not willing to provide any of those, his intentions are likely not genuine. He doesn't want to take any risk, he wants all the risk to fall on the vendor and for the vendor to have no comeback on him if he screws the business up after handover.

What security do £1 Charlies generally offer? They offer a debenture on the company ie. they offer the business that they're buying as security for the loan the vendor is giving them.

But what happens if they run the business down after acquiriring it, or screw it up, or load it with debt, or strip assets? The business will become worthless and, as it is security for the loan, the vendor ends up with no security to claim on when/if the buyer defaults on deferred payments.

This is what happened with all the owners of many day nurseries who sold their businesses to Jonathan Jay's Welcome Group on deferred payment terms. When Welcome Nurseries went bust, these vendors lost their future payments under whatever deferred payment contract they had. And Jonathan reneged on the Personal Guarantees he had given them.

TIP #7 - VENDORS SHOULD NOT DISCLOSE PROFIT

One of the questions all buyers ask is, "How much profit did the company make last year?"

In the above podcasts, they advise buyers, "The chances are that (the seller) will fluff the answer!"

If you've never sold a business before, any answer you give to this question is the wrong answer. ANY answer!

I won't go into the why, it's a long story, but answering the question with numbers is dangerous. The vendor can say that all the figures are in the Information Memorandum (IM) already supplied.

Maybe the vendor could get a bit offended if the buyer hasn't done the courtesy of reading the IM.

But they need to, ideally, avoid answering the question.

And certainly, certainly avoid getting into justifying how it could have been higher or how much personal benefit was derived from the business, about how family members were paid a small salary to use up their personal allowances despite not working in the business, how the business was run to legally minimise the tax bill, nothing!

Those are all traps! Unfortunately, almost every seller of small businesses does so engage!

It's best to not address these questions at all. Those are matters that should be answered in writing, formally. And if there's something the seller wants to say, it's best they put in writing and give it to their business broker to say on their behalf or, if they're doing a DIY business sale, to leave it to their accountant / lawyer to pass on.

If it's something that the professionals can't say either, perhaps because it crosses a legal line, it's worth taking a step back, removing the business from the market and reassessing.

But it's best to not answer questions that really should be in writing or dealt with by the professionals.

A vendor can say that once the buyer has been qualified and vetted, he'll get an introduction to the vendor's accountant to discuss numbers. If the buyer's a £ Charlie, he's never going to pass vetting and so won't get to speak with the accountant.

But if the vendor has given away a lot of private information about the business before the buyer has passed vetting, that's dangerous. There are all manner of ways in which he can use that against the vendor.

TIP #8 - THE MIDDLEMAN PROBLEM

In many of the above podcasts, they advise business buyers to avoid businesses being sold by business brokers and to prefer businesses being sold directly by the owner.

Selling a business is a complicated affair. Most owners of small businesses have no idea of how really complicated it is and the millions of traps awaiting the unwary. If they have a good business broker or corporate finance firm acting for them, they've got a seasoned pro on their side.

£1 Charlies don't like the seller having a professional on his side.

A professional will be able to see through the £1 Charlie's tricks, and the £1 Charlie doesn't want that.

They advise students to deal directly with vendors and advise students how to probe sellers for weaknesses. They advise why buyers shouldn't target businesses being represented by brokers, "as soon as (you've) seen the the weakness (you) know exactly where to strike whereas when you've got the corporate finance house or broker in the middle then you're restricted from seeing all of that."

What's a seller's best defence against this?

Finding and hiring a good broker / corporate finance firm / other transaction advisory professional obviously helps. But that can sometimes be expensive, and the business may not be big enough to afford one. Also, it can sometimes be difficult to find a good advisor. So my advice would be to

•     Spend a lot of time reading the advice on this site and elsewhere;
•     Be vigilant in identifying £1 Charlies as early as you can (how to vet buyers);
•     Be bold, and quick, in dropping a buyer if you suspect he's a £1 Charlie and
•     Do not attempt a transaction without a good M&A / transaction lawyer.
      .
  
  

TIP #9 - PSYCHOLOGICAL MANIPULATION

One of the pieces of advice they give at the above podcast is this: "Remember, if someone calls you and you really aren't in a position to sit down in a quiet room with a pad and pen and your laptop open to look at the website while they are talking, you must always call them back."

That doesn't seem bad advice. In fact, it's sound advice. But they go on to say,

"You must maintain control of the situation. The best way to keep control is that you call them when they are unaware, when they're on the hop....this is all about taking the psychological advantage."

They want to catch the seller "unawares". Ouch!

Then, when you get the seller on the hop, the advice is to ask the seller specific questions, note the answers, and then later in a different meeting, ask the same questions to see if there's any variation you can exploit.

The example given is about "timeframes".

The first time you speak to the seller, the podcast says, if you ask him about time frames, he'll be a bit nonchalant and say there's no hurry.

The next time maybe you meet him in person and casually ask again. He may disclose that he needs to sell by Easter.

That gives you an advantage, they're told. "You know he's under some time pressure."

So how does a seller, combat this kind of psychological manipulation?

What can he do apart from calling the BUYER on the hop or otherwise getting HIM floundering and flustering because he doesn't have a pad and pen handy (perhaps because the seller "accidentally" bumped into him outside his office)?

The seller does this by scheduling all calls and not tolerating the buyer calling out of the blue. The seller has a business to run and the buyer needs to respect his time. If there's a broker or advisor handling the sale then the buyer should be calling the broker, not the vendor / business owner!

TIP #10 - FAKE IT TILL YOU MAKE IT

In his podcast #4, TDA say in relation to talking to a seller whose business is already on the market with a business broker, "Sometimes people will ask you if you've heard of the broker. And the answer is no. Always no. No, never heard of them, never come across them....".

Feign ignorance!

There's a reason for this ...but the important lesson to take away is: You cannot take anything a buyer says at face value. He could be a £1 Charlie in which case he's probably blagging his way. Whatever he's saying, about anything, could be a lie.

£1 Charlies are taught to "fake it till they make it". They are taught to act like big shots, like wealthy individuals, like seasoned dealmakers.

So they'll boast about other transactions they're currently working on.

Or they'll provide an "acquisition criteria" document to say they looking to acquire businesses in xx sector that are generating between £200K & £500K (or whatever other numbers).

Or they'll say they're going to take your business to a stock market listing or they're doing a "roll up".

There's plenty of other big talk where that came from, but they will be very, very reluctant to talk specifics.

So ask specifics.

"What other transactions have you done?"
"We are currently in negotiation with several targets but we can't disclose the names as we're under NDA."
"OK, so tell me about past deals, deals that are completed and therefore not under NDA. What companies did you buy? What did you sell? What do you currently own?"
"We can't disclose that."
"That's strange. Other investors have always been keen to show off their history. I'll have to assume that you've not really done any transactions!"

"If you're looking for businesses generating £500K, then you must be big players."
"Yes, we are. We are serious investors."
"OK how much of cash can you prove in your bank account right now to cover the rest?"
"We can't show you our bank statements! That's ridiculous."
"Why not? You're going to be asking to see mine, aren't you? And I only need to see your balance, not your transactions! You are free to redact transactions."

"What do you intend to do with my business post-acquisition?"
"We have a buy and build strategy to create a large group."
"One of the UK's self proclaimed acquisition experts tried that in the nursery sector recently (Jonathan Jay) and he failed miserably. It's a lot more difficult than it looks. What evidence do you have to show you've got these buy and build skills?"

Is he driving with L plates here? The seller could emphasise that he expects payment in hard cash, not shares in some "group" company that's going to go IPO or whatever in the future. The buyer may have great confidence in his own ability to build a large group, despite never having done so before, but the seller doesn't have reason to share that irrational exuberance.

"You say you are connected with several High Net Worth Individuals who'll fund this deal"
"Yes, absolutely. There is no problem with raising funds."
"OK, greay, have those individuals come & speak with me and I'll vet them and their ability to fund the deal."

If there is indeed a HNWI backing the deal, it's best to deal directly with the organ grinder rather than someone who has to go back and forth getting approvals and sign-offs.

CONCLUSION

This page has but a small selection of quotes from a small selection of podcasts from The Dealmakers Academy website. This business has more than a 200 other podcasts with more tips for buyers! And lots of YouTube videos as well. I may post about more of them later. But ...

If the above tips are what they are sharing publicly, you can bet that the private tips they are giving attendees of their £10,000+ programme are likely to weigh the scales even more against business sellers.

And The DealMakers Academy is just one course churning out £1 Charlies. There are at least a dozen more. Experts estimate that 90% of the "buyers" and "investors" in the market today are £1 Charlies.

As someone who has long been fighting and advising against £1 Charlies (read my LinkedIn posts on the topic here and here), I also advise business brokers and corporate finance firms on more advanced methods to detect and eliminate £1 Charlies from the buyer pool.

Whether you're handling a DIY sale and have some buyers you want checked out, or you want some independent advice on the buyers your business broker has assembled for you, get in touch and book a consultancy session with me. It'll be a worthy investment if it saves you ending up like the numerous business owners who lost tens, sometimes hundreds, of thousands of pounds to buyer scams.