Active vs Passive Sellers

ACTIVE SELLERS

PASSIVE SELLERS

• They typically follow a more formal process.
• Direct interaction with Seller may be limited, if working with their M&A Advisor.
• Your process and timeline will likely be influenced by the active seller’s timeline plan.
• Process can be much quicker and more certain than with a passive seller effort.
• Process may be driven by previous investors looking to cash out of their investment.
• An active seller has started the sales process as the result of a prospective buyer contacting them or the seller have launched a sales marketing campaign.
• The Buyer may be faced with a competitive situation.
• The Buyer may be required to submit an initial bid without even talking to the owner or completing adequate initial due diligence.
• Working with active sellers can be more expensive than working with passives.
• Active Seller Acquisitions tend to generate more cash at closing than with passive sellers.

• The Buyer approached the seller to determine seller interest.
• The Buyer will need to create a sense of urgency and establish a timeline with key defined milestones.
• Process tends to be less sophisticated than with Active Sellers.
• The Buyer will likely need to educate the Seller on the M&A process.
• Focus on sharing experiences and building a personal relationship.
• Over time you can establish credibility and a transaction foundation.
• Prepare to get third party advisors involved later in the process, such as accounting firms, valuation firms and business transaction law firms.
• The Buyer needs to take the time to understand the often complex set of needs and wants that are driving the seller to sell.
• Due Diligence will likely take longer than with active sellers.