SUCCEED BY LISTENING ON MANY LEVELS: Every conversation between a FOCUS Partner and a client takes place on multiple levels. A good listener is sensitive to a number of levels of listening and also understands that the actual words spoken often do not deliver the most important message.

In the article below, “Can You Hear Me Now? Really Listening to a Client,” David M. Roberts shares the expertise he has gained as an executive, investor and transactions professional with more than 30 years’ experience founding, building and advising small to mid-size companies. Mr. Roberts, FOCUS Managing Partner, Western Region, is a former attorney and buy-side securities analyst. He is a seasoned entrepreneur who has founded fifteen companies and also has been involved in more than $250 million in financing, either as a principal, director or as an advisor.

Read any “how to” manual on mergers and acquisitions and you’ll find checklist after checklist about how to prepare to buy a business, how to sell a business, how to value a business, how to do due diligence, how to get the best price, how to reduce the price, how to find fraud, how to put lipstick on a pig. Many intermediaries not only know the checklists cold but can recite them from memory, and probably have written three books full of checklists. But the most important checklist that every successful intermediary should know is the shortest.

  • Ask open-ended questions
  • Listen carefully

Clients come in many shapes and sizes. Whether it is a seller who has built a $20 million software publishing business over 15 years of intense competition and survived or a buyer who has finally reached that critical point where rapidly expanding cash flow allow him or her to think of growing by acquisition instead of internally, many owners and CEOs are new to the experience of buying or selling.

Frequently, they don’t know what they don’t know, and often they don’t really know what they want. A successful intermediary is almost always a good listener. An individual who understands the dynamics of listening well can be critical to the success of this type of client.


What is a good listener? A good listener understands the techniques for listening effectively. First, a good listener understands how to create a climate suitable for speaking and listening. He or she does this by asking open ended questions–questions that encourage an individual to talk about the future often yield information about the present. As one FOCUS Partner put it, “You want the client to answer questions you didn’t even think to ask.”

Open ended questions such as, “How do you imagine you’ll spend your time after the transaction is completed?” allow a client to talk about many different matters, some of which will be only tangential to the content of the transaction but may be critical to its success.

For example, we represented a buyer negotiating with a seller who was adamant that he wanted all cash on a $2 million purchase price. Our client was prepared to pay up to one-third each in cash, stock and a note but couldn’t under any circumstances pay 100 percent cash because the client’s then current cost of capital was north of 20 percent.

In talking with the seller we inquired about his plans following the sale. He said, “I’m taking my RV and spending the next three years on the road seeing what I haven’t seen in 30 years.” He then added that he was planning to pay for his travel with the interest he was going to get on the T bills he would buy with the proceeds of his sale.

Our first inclination was to tell him that after capital gains taxes, he’d be earning less than $90,000 in interest. We resisted that impulse and inquired further about his travel plans, why T bills and not something else, whom he planned to travel with and what was his first planned trip. He spent nearly half an hour talking about his plans. It became clear that he was going to need more than $90,000 a year to maintain his full-time residence, pay his taxes, pay for health insurance and pay for his travel.

Follow-on questions yielded even more information about his intentions and his cash needs. When we finally asked him if he thought $90,000 a year would really be enough, he replied that he would be a lot more comfortable with more. In the end, we created almost twice as much cash flow over a ten-year period with an installment sale and a note with a coupon higher than T bills with enough security that he could sleep well in his RV. And our client doubled his IRR on the purchase.


Every conversation with a client takes place on multiple levels. A good listener understands these levels of listening: content, process and emotion. Astute listeners also understand that the words spoken very often aren’t the most important things to understand.

Words are content and content is the level where most people listen. When a client says, “I want $4 million for my business and not a penny less,” many hear a clear and unequivocal demand with little flexibility.

The second level of listening is that of hearing about the process that is taking place. “You guys aren’t going to drive this negotiation. I am.” Many hear a demand about process that tells them who is the boss.

The third and most important level of listening is the emotional level. This is the level where the true emotions are often never stated in words. Emotions include anger, disappointment, hope, fear and more. Emotions are most often revealed by the language used in communicating content and process. These deeper emotions may include fears such as loss of control or anger about having to sell the business or resentment at having come to the end of a career.

To be a sensitive listener, naming the emotions is not required. You don’t have to tell the speaker, “I see that you are really angry about having to sell your business.” However, understanding that a demand to control the process may often be the _expression of a deeper underlying emotion is critical. Nevertheless, these emotions may be far more important than the content or process response to questions.


When representing a buyer engaged in a rollup strategy, the CEO, who had little experience in buying companies, set out some rather strict criteria for the kinds of businesses he consider. A business had to be strongly cash flow positive, management had to be willing to stay, every major customer had to commit to remaining with the company for at least 12 months following the transaction and most important, the numbers had to be audited. He had come from a major accounting firm early in his career and wasn’t about to “buy a pig in a poke.”

However, the industry in which he was buying companies had neither very large nor very sophisticated sellers. Few had ever audited their numbers even though many kept fairly good records and had engaged reputable accounting firms.

By asking the client to tell us about his investor group and how he came to be hired as the CEO, we learned that the investors were very sophisticated in the rollup business in general, but not in this industry in particular. The CEO was a “great athlete” who had not run this type of race before, who did not know much about the industry, but was terrific at general management and raising money. It was his first CEO role. He was worried about buying a company with bogus numbers and angering his investors. It was clear that success depended upon overcoming his fear of inaccurate numbers in the acquisition candidates.

The general acquisition criteria were easily met but the audit requirement was almost impossible. We knew the investors could live with “reviewed numbers” and we knew the CEO would pay for a review. Being able to address his fears in a way that met the real criteria of his investors allowed him, and us, to successfully buy multiple companies over a five-year period.


The short list of lists for anyone engaging in successful mergers and acquisitions activities is: one, ask open-ended questions and, two, really listen to the answers, not just the words.