How do you know when a potential buyer is actually interested in your company or if they’re just simply fishing for information? Or worse, are they trying to get access to some of your proprietary trade secrets?
Unless you already have a relationship with the buyer and you’ve done your homework to properly vet them, it can be really difficult to figure this out and understand what their true motivations are. So today we’re bringing in a certified forensic investigator, someone who’s an expert at telling if someone is being truthful or if they’re just BS’ing you.
About Our Guest
This episode of Deal Closers is hosted by Izach Porter, brought to you by WebsiteClosers.com, and is produced by Earfluence.
Michae Reddingtonl – 00:00:03:
always looking for hidden value in our high impact conversations. There’s more out there that we have to learn to know, to understand, how we put ourselves in a position to capture. That gives me the chance to judge how transparent and honest they’re being, but build something to work on. So although we’re doing it for our own strategic advantage, hopefully they also take that as, oh, he cared. He did his due diligence. He looks me up. He’s asked me about where I’m from. He cares about me. Helps elevate us in the conversation.
Izach Porter – 00:00:42:
You’re listening to the Deal Closers Podcast brought to you by WebsiteClosers.com. A show about how to build your e-commerce business to be profitable, scalable, and one day even sellable. I’m Izach Porter and today I want to talk about exit process and specifically the process from introduction to giving information to potential buyers to due diligence. And how do you know when a potential buyer is actually interested in your company or if they’re just simply fishing for information and trying to potentially get access to some of your proprietary trade secrets? I’ve been through the process hundreds of times and I can tell you that unless you already have a relationship with the buyer and you’ve done your homework to properly vet them, it can be really difficult to figure this out and understand what their true motivations are. So today we’re bringing in a certified forensic investigator, someone who’s an expert at telling if someone is being truthful or if they’re just bullshitting you. Michael Reddington, welcome to the Deal Closers Podcast.
Michael – 00:01:51:
Thank you for having me, Izach. It’s great to be here.
Izach – 00:01:53:
Give us some background on yourself. know, would you describe yourself as a bullshit detector?
Michael – 00:02:01:
bullshit detector or bullshit provider? I guess it depends on the day. I’ll keep it short. I started out as a school teacher and a baseball coach, ended up going back to school to get a business degree, a part-time job in investigations, turned into a full-time career. And to your point, I ended up earning my certified forensic interviewer designation, and then eventually working for an organization that is one of the world leaders in providing training to professional interrogators, as well as conducting interrogations on a contract basis. Did that for years before starting my own company and authoring the Discipline Listing Method? So when you talk about being a bullshit detector… There’s lots of ways to go with that. It’s for me, whether or not somebody is lying isn’t necessarily important. It is being able to understand when their mindset is changing or their mind state, it’s probably a better way to say it. Their mind state is changing or when their emotions are changing. And as I was listening to you talk about the introduction, the sharing of information, the due diligence process, each one of those we can start to compartmentalize with things to look and listen for and also techniques to use as well. But really when we think about is somebody bullshitting us or not? it’s, believe it or not, it’s more helpful to go the other way. So we have cognitive biases. We hear about confirmation bias all the time and for good reason. And if we fall prey to a lot of these deception detection myths of which I would be willing to bet that of everybody listening to this conversation right now, nearly everything they’ve ever been told that people do when they lie. Speaking of bullshit is bullshit. By the way, are we setting the record for the amount of times that word is used in the opening stanza of a podcast?
Izach – 00:03:48:
I think so. Yeah, I think we did it right there. Let’s roll with it.
Michael – 00:03:52:
If it works, we’ll do it.
Izach – 00:03:53:
Michael – 00:03:54:
A guy named Charles Bond, and I’ll keep my geek to a minimum, I promise, but a guy named Charles Bond did two enormous International Research Studies where, if I get these numbers right, he was something like 7000 participants from 400 countries. The single biggest myth associated with truth and deception is aversion gaze, breaking eye contact. It has nothing to do. If somebody is comfortable within their own personality norms and their own cultural norms, they’ll maintain eye contact. If somebody is uncomfortable within their own personality and cultural norms, they’ll break eye contact. I’ve interviewed plenty of people that, unfortunately, have been telling the same lie for so long, they had no problem looking me in the eye and lying. I’ve also interviewed people that were so uncomfortable telling the truth, victims, witnesses particularly, they would avert eye contact when they were telling the truth. So a lot of these things that we’ve been told, scratching the face, all these other things, yes, people can do them when they lie, but they’re more indicative of a shift in somebody’s comfort level or mental state. So instead of going into a conversation and thinking, am I going to catch somebody lying? Let’s go in with the mindset of, let’s give them every opportunity to tell the truth. And based on our preparation and then our due diligence, our follow-ups and the things I’m sure we’ll get into, do they appear to be telling us the truth? If so, okay, great. If not, why? And now where are some of these deviations happening what doesn’t make sense and how do we chase them down? So I’ll pause there before I run on for the next 20 minutes.
Izach – 00:05:23:
Yeah, okay, I wanna break down a couple of those points you made and give a little bit of context and some background to the audience. So you and I met in a Buffalo Wild Wings after a professional networking event that you had. We have a mutual very good friend in common. You started telling me what you do and immediately I was like, man, this could be so helpful in the M&A process because one of the biggest challenges that I run into, Mike, is that I get, you know, we represent sellers of e-commerce and tech businesses. Yeah, we’ll get hundreds of buyers responding to our listings that are for sale. And they all, often many buyers wanna talk with the seller immediately. And then we also get a lot of buyers who will make offers, sometimes unsolicited offers, sometimes offers before a call. And so one of the challenges that I have is filtering through that pool of buyers and kind of vetting out who are the good buyers, who are the serious buyers, who can execute. And probably one of the biggest risks in the process that I have. is getting a deal and putting it under contract with a buyer who doesn’t actually have the means to close the transaction. There’s a lot of things we do to try to determine that. We check liquidity statements. We ask them about their experience. Of course, we do all the online search for their online profiles, look and see if they’ve had a history of successful acquisitions. Sometimes it’s easy. Sometimes it’s a Private Equity Group and they’ve got a Web page. You can look at their Portfolio Companies, Piece of Cake. There are a lot of times when we talk with a buyer who’s never done an acquisition before, they claim to have funds. Sometimes they even show proof of funds. Sometimes it’s true and sometimes it’s not true. I’ve put deals under contract with buyers that have had little to no experience and gone through a closing process flawlessly. I’ve also wasted months with a buyer who just ultimately was a flake. If there were just some things that I could know about how to read people in the context of this M&A situation and how to determine if there were some red flags, that would be really helpful. I think it would ultimately save time. It would be a better experience for my clients. It would just make me a better broker and I think it would make our listeners better prepared to go through this process. That’s the context of the conversation that I wanted to have with you a little bit. I think your comment about… you know, breaking each one of those stages down. probably makes a lot of sense because they are different. They’ve got a different purpose. But just to go back up to a little bit of a high level, it’s like, how can’t, you said that a lot of the myths, right, like eye contact. The other thing that we deal with, I’m gonna add one more nuance here just for context, is that almost all of my interactions with buyers are either on the telephone or on video calls like this. So where, you know, because we’re dealing with companies that are international and buyers that are international, you know, national, international, not geographically located in Charlotte, North Carolina, where I sit. So what are some things I should be looking for as a broker or what are some things our listeners could be looking for, you know, going through this process or frankly, in any other part of their business dealings that would clue them into, like what is a good cue for a lie? You know, if eye contact isn’t it, is there a silver bullet to look for?
Michael – 00:08:50:
I wish I could give you one. If I had the scientifically proven silver bullet for this is what people do when they lie, we wouldn’t be having this conversation here in Charlotte. We’d be on a private island somewhere.
Izach – 00:09:03:
I had a girlfriend once and I thought that she would burp every time that she was lying. Is that common?
Michael – 00:09:10:
If she’s stressed out enough about it, it just might be. We’ve got some funny videos for the interrogation. We used to audio video record all of our interrogations. They still do, I say used to, I don’t work for them anymore. But we’ve got some funny videos. One of the founders of the company was interrogating a guy who every time he lied, he picked his nose. And of course Dave catches onto this and Davees got a great sense of humor. So Dave just starts asking questions that lead into answers. He knows the guy’s gonna lie about, not just for entertainment purposes. He’s getting like two knuckles deep, his finger comes out, goes right back in. It’s pretty funny. That’s hilarious. Yeah, that’s probably the funniest. My buddy Wayne did one where the guy would look down at his foot every time he lied. Like he was sitting with his, he was sitting in his chair. So his left leg is bent like degrees, but his right leg is sticking straight out kind of 45 degrees, two o’clockish maybe to the side. And every time this guy lies, he looks down at his foot, looks down at his foot. And as soon as Wayne picks up on that, like we know we’re making videos. So as soon as Wayne picks up on that, he’s got a cadence getting this guy to look down in perfect rhythm throughout the day. So yeah, I mean, people will do funny things. But at an individual level, it comes down to establishing our behavioral norm first. You’re different, I’m different, and we both communicate differently in different conversations. What’s normal for you and I talking right now might be different for you and I in a formal business meeting setting or you and I in a more casual public setting, whatever it might be. So really one of the keys is going to be at the start of any conversation, and it doesn’t matter in person, internet, phone, whatever it is, doing the best we can to establish their communication behavioral norm for this conversation. And one of the ways to try to do that is ask a couple of questions, don’t go crazy, three to five maybe, where we’re trying to give them the opportunity to answer stress-free or reasonably stress-free questions. So certainly nothing deal-related, certainly nothing business-related. If it’s confirming contact information, that might work because if they want to keep this conversation going, make sure we’ve got the best contact information for them, that could be it. It could just be basic. If you know you have something in common with them, ask them about their weekends, was there a recent big sporting event, or recent big news story? Something that we can be reasonably confident of where a true answer likely lies, and they should have no stress answering the question.
Izach – 00:11:39:
Gotcha, that’s kind of some small talk, yeah.
Michael – 00:11:42:
Yeah, but it’s strategic small talk. It’s not small talk for the purpose of. Probably the cheesiest, but most global example I can provide is anytime I go to purchase a vehicle and that salesman or saleswoman comes and meets me on the lot, I know they’re building rapport with me for the specific purpose of using whatever I say against me to help get me into the vehicle they want at the price they want. I know that’s what they’re doing. So I’ve got two choices, I guess three. I could just play along, I could shut it down, or I could use it to my advantage. So now is there building rapport with me? I just feed right into it. And I’ll start asking them, when was the last time they had a day off? What’s their schedule for today? If my wife and I are gonna go grab lunch before we make a decision, what time is their lunch break? If for some reason we can’t make a decision today, what’s their schedule tomorrow or Wednesday? These are all questions that they’re almost guaranteed to answer honestly, because they want to sell me a car. So they feel like it’s small talk, but now I’m actually using it strategically to build that baseline. I want to see what somebody looks, acts, and sounds like when I can be reasonably confident that they’re being honest, stress-free with me at this moment in time. Once I have that, then I can look for deviations.
Izach – 00:12:59:
Okay, so I’m trying to just think of a couple questions that I would ask like early on in kind of this buyer selection stage, maybe, you know. Where are you from? Is there anything that comes to your mind? Right. So I’m talking to a buyer for the first time. I know they’re interested in the deal. I’m trying to avoid deal specific questions because those are the ones that are coming to my mind right now. But those were those are the questions where I think somebody immediately if they were trying to act like they had more experience or more capability than they actually do, that those are the ones where, like if I ask, Oh, how long have you been in space? How long have you been looking for companies? They would, that would be an easy question to mislead me on out of the gate. So. Can you think of a couple questions that I would, if you were gonna interview somebody who is buying something, that would be stress-free questions for them to answer?
Michael – 00:13:45:
Yeah, one way to go could even be if you have any indication on where they’re from prior to the call. So if you’ve gotten any type of email correspondence, if you had the opportunity to look them up online and you know they’re from Kansas City and they’re from London or they’re from Ontario or whatever it is they’re from, do a quick Google search into a London newspaper, a Kansas City newspaper, yes, newspapers don’t exist anymore, news websites, Ontario, whatever it is. And then just what have been some of the big local news stories, what’s the weather been like, what’s going on up there? And so now I’m not necessarily asking questions about the deal or even them as a person, I’m starting on their locale. So hey, go on.
Izach – 00:14:29:
I’m easy to do because I do generally have geographic information before the call. Like I always have like a LinkedIn profile or something like that. Yeah, so I could say, hey, what, you know. what’s going on in Seattle right now, or I saw, you know, I saw the, the, the fires in Canada, is that affecting you or, you know, just that kind of stuff where I, where they were, they’re truthful answer. I would know that it was truthful, right?
Michael – 00:14:53:
Yes. And if we don’t know for a fact, there’s a much higher likelihood. There’s no reason to BS about that.
Izach – 00:14:59:
Michael – 00:15:00:
And if for some reason, like their LinkedIn profile says they’re from Ontario, but they’re in Miami Beach, when you start asking about the fires and like, Oh, yeah, they’re, um, Yeah, they’re right in my backyard. And you’re like, wait a minute, no, they’re not. They’re about 50 miles away at least based on the story. So now you can start putting things together if for some reason they’re clearly not where they’re portrayed to be. I’m sure that’s unlikely. So yeah, you should be getting a much greater feel of what they sound like when they’re being honest. And it would probably buy us a little bit of extra cache in the conversation because we’ve looked into where they’re from. So although we’re doing it for our own strategic advantage, hopefully they also take that as, oh, he cared. He did his due diligence. He looks me up. He’s asking me about where I’m from. He cares about me. Helps elevate us in the conversation.
Izach – 00:15:52:
But I guess like the image that comes to my mind as you’re talking about this concept is like when you watch the videos of people taking a lie detector test on a movie or whatever, they always ask, what’s your name? They’re looking for that flat line at the beginning. So you’re looking for this. What is your baseline? mean or like in a totally unstressed situation where you have no reason to manipulate or dissuade.
Michael – 00:16:15:
Izach – 00:16:17:
That’s step one.
Michael – 00:16:18:
And then we’ll do deviations from that.
Izach – 00:16:19:
Okay. So that’s step one. What’s next?
Michael – 00:16:25:
Well, once you have that, I think the biggest, and you said this is part of your introduction, the biggest advantage you have is the hundreds if not thousands of times that you’ve done this. Yeah. So when you start looking at some of those intakes and when the requests that are coming in, there’s probably an easy filter where right off the top, you can say there’s a really high probability that these people don’t have what we need. They’re not really interested. They’re just fishing based on their introduction, based on the faint sense of urgency, based on the lack of detail in their questions. So I have no doubt, and I’m certainly not asking you to reveal any of it, just speaking to it, that you have a process in place largely to help start those filter stages as you go through, get rid of the ones that clearly don’t have what you’re looking for and start working down. Yeah.
Izach – 00:17:16:
So a big red flag in my business for us is when we’ve got a deal. I’ve got a deal, a transaction right now we’re running. It’s a 60-million-dollar business. And a guy just sent me an LOI offering to pay 60 million dollars for the business. No questions. And that’s surprisingly not that uncommon, but I’ve never once closed a deal where somebody just sent an unsolicited note. No one who’s going to spend 60 million dollars. doesn’t want to talk to the owners, isn’t going to ask them financial questions, doesn’t want to, you know, at least do some preliminary homework. They have a team, you know, they’re, it just, it’s not a credible offer because it’s not going to come through. Right. So that’s a, that’s an obvious one. Now. We’ll still accept the LOI obviously and I always share it with the seller but I preface it with like this is likely not credible and we’ll do our background but that’s like an easy one and there’s a bunch of situations like that where another one is somebody sends an initial email, hey I want to buy this company, will the seller accept 100% seller financing? That means they want to buy it and pay no cash at closing. They want the seller to hold all the paper. That’s a legitimate buyer, but the seller’s never going to accept that deal. So it’s not a credible offer. So yeah, we’ve got that kind of filter and we’re looking for those types of circumstances. But it’s the more nuanced ones that are harder to spot, you know, the people who are a little bit more savvy and sophisticated in their deception.
Michael – 00:18:40:
And that’s where your situational awareness and your ability to ask detailed follow-up questions becomes most important. Where we find that most people miss an opportunity to figure out that somebody isn’t who they are pretending to be or they know more than they’re letting on, is they were presented with an opportunity to ask a follow-up question. And either based on an assumption they were making or a distraction that they were experiencing, for whatever reason, they didn’t ask the question. And because they didn’t ask the question, they didn’t give this person the opportunity to prove that they could go into greater detail, explain it further. And all too often, unfortunately, our brains start connecting dots that don’t necessarily connect. So we’ll start making assumptions that if somebody makes a certain statement, it means that they understand something else, that they know something else, that they must have something else. And so we check that box. One of the things that we try to work with a lot of our clients on is instead of listening to confirm our assumptions, which is how our brains are actually wired to work, let’s listen for opportunities to ask follow up questions, explain further, provide more examples. So now, as we continue to ask those follow up questions, the deeper we dig, the easier it will be to separate those who are for real from those who aren’t, because those who are for real should be able to provide more examples, more details. They should be able to track that conversation with you all the way through. Those that aren’t won’t. And I would assume, as I talk about not making assumptions, right? I would assume that even for some of these first time buyers that you’ve talked about before, who are good, and they’re here, they’re legit, it’s just the first time they’ve done it. I would imagine that a lot of those cop to being a first time buyer at some point in the conversation. Oh, usually right away.
Izach – 00:20:32:
Michael – 00:20:34:
That’s a great question. I hadn’t thought about that. Let me go back and talk to my attorney. Let me go back and talk to my financial guy. Let me go back and talk to my accountant. So they cop to it right away and assuming they’re legit, they’re going to follow up with the answer to that. As opposed to somebody who just gives a vague answer or responds with another question or avoids it entirely, hoping that you won’t come back to it.
Izach – 00:20:55:
Yeah. How about, OK, so the other thing I think about a lot in this process and actively work to protect my clients against is this kind of fishing for information scenario that I talked about in the intro, right? Where maybe somebody has a competitor they want to get on, they want to find out. marketing agency, what forms of paid advertising they just want to mine for information to use for their own purposes. And we’re very careful not to give out any proprietary information. during those initial calls for that reason. But how can you potentially determine that type of a scenario. Anything that kind of would come to mind as something to watch out for there.
Michael – 00:21:36:
My guess would be the question, my first guess would be the question comes too early. Yeah. A lot of times when people are truly interested in the buying process, I seriously doubt those are among the first questions that they ask. But when somebody is fishing for information, I would be willing to bet that more often than not, they’re asking those questions earlier than normal, because that’s really what they’re looking for. So this isn’t a long con to them. They’re not here to string this along and kind of disappear in the end and nobody knows. They’re here to get as much information before they get caught and get out. So they’re probably asking questions sooner than a normal buyer would. And my guess is their delivery, when they ask the questions for lack of, unless they’re really good, that when they ask their questions, their delivery is probably sharper. And what I mean, I don’t mean more intelligent. I mean like sharp like edges. Like the way they ask the question, is it smooth? It’s not part of a natural conversation. It almost seems like they’re rushed to ask the question or maybe they stutter when they ask the question. Because if they know they’re not, again, unless they’re really good, if they know they’re not acting in a way that’s consistent with who they’re pretending to be, now as those emotions change on the inside, that’s when some of that nervous or incongruent behavior begins to show on the outside.
Izach – 00:22:58:
That’s super interesting because I think you’re exactly right. In my intuition, when a potential buyer asks, oh, who’s the manufacturer for this product in the first call or the first seller call? My response is always, hey, that’s something we could talk about in due diligence. Like way further down the process. There’s some of those questions that are… know, if somebody knows who the manufacturer is, they can go and order the same product and compete directly with the seller. So. think you’re right. It’s almost like the question becomes out of cadence for the conversation. People having a conversation about sales and all of a sudden they could jump to who’s the manufacturer or yeah and I think you’re right. They’re not they’re generally in this case in that case where it’s a potential competitor fishing for information. They’re not in it for the long cons. This isn’t like something they’ve practiced. It’s just they got interested like hey let me have this conversation and see what I can learn. And so. think the way that we protect against that is just all that stuff comes after your you know once you’re in under contract you’ve got We always have NDAs in place, but you’ve got another NDA in place. You’ve got an LOI in place. There’s some protections there for the seller. Later on in the conversation, some of those questions are appropriate, but early on, they’re they could be red flags. Interesting. Okay. How about how about this idea of? If you’re talking to somebody on the phone versus, you know, on a video versus in person, how does your, how does your thought process change, Mike?
Michael – 00:24:32:
believe it or not, our success in discovering how honest somebody is or how much bullshit they’re throwing at us should increase the fewer variables we have to juggle in a conversation, which is counterintuitive to what most people feel. Most people feel like if you and I were standing face to face having a conversation right now, that we would have a better opportunity judging if the other one was BSing. That’s not necessarily true. Because now I have to be trying to evaluate everything you’re saying and doing while I’m thinking about everything I’m saying and doing while I’m trying to account for everything that’s happening in the environment around us that could be impacting our behavior. So yeah, some things might jump out. We might have some gut feelings. We might catch some things depending on the specificity of the conversation where we are. Those are a lot more variables to juggle. Now let’s take it down to a video call. I can throw nine-tenths of your nonverbal communication away. Yeah. because I can’t see most of your body anyway, and I also don’t know what’s going on. So a few minutes ago, it sounded like somebody might have been knocking at your door. If I was talking through a specific component of the sales process, and you turned around and looked away, and I think to myself, wow, I must’ve really just offended him or scared him. No, somebody might’ve just knocked on your door. Like I have no control over your physical environment. I don’t know what’s behind your screen. So if your dog comes in and knocks over a… plant that busts all over the floor, I see your face react. I could assume that has something to do with what I say, but unless you tell me, I’ll never know that your dog was up to no good once again. Yeah. So what I wanna do is I wanna focus on what I do have, not what I don’t have. And what I do have is your verbal delivery. So now if I feel like I’ve really got your attention and I’m seeing on time nonverbal reactions to what I’m saying, it might be a little bit more reliable, but that’s assuming there’s no lag in video connection and those other things. So I’m going back to the verbal. How fast or slow are you talking? Is it changing? How loud or soft are you talking? Is it changing? How long are you pausing before you answer questions? Is it changing? Does your tone of voice match your answer? Are you giving me… Something that sound that should be a question, but your tone is too confident Are you telling me something that should be a statement, but your tone lacks confidence what’s your specific word choice telling me if I ask you a direct question and the first word out of your mouth is well there’s a reasonable chance that I’m not getting a specific honest answer from you there. One of my favorite things to pick up on is if I’m having a conversation with somebody and they start answering, they’re in the middle of a word or a sentence and they cut themselves off in the middle of it and change what they’re saying. Now I know what you’re really thinking and feeling. I know what you want me to believe your thinking and feeling. And I know that this conversation means enough to you that you’re going through an exercise in impression management. So by being able to pick up on all of these things, now I’m significantly increasing the amount of intelligence I’m gathering. Oh, by the way, I don’t have to worry about me. You can’t see the rest of me. So if my feet start tapping, I’m not worried about you picking up on that. And I can reduce the amount that I have to think during the conversation. Because I can strategically put a notepad on my right side because I’m right-handed. I might be able to put a couple reminders up for questions I wanna ask, a couple reminders up over here for stories I wanna share, whatever it is. So now I can significantly reduce the amount of variables and be more focused on a shorter number, which should make me more successful. And honestly, as we go to the phone, that’s even more true. Because now we can’t see each other at all. So I can have whatever resources I need in front of me, you won’t know. The one recommendation I really would make, which is harder and harder for people these days because of technology, is either hold the phone to your ear or have earphones in, have an earpiece in. because speakerphone was literally invented so we could do other things while people are talking to us. Yeah. which means we’re not paying attention to the nuances of the delivery. If I have the phone to my ear, if I have an earpiece in, now if somebody takes, if somebody exhales before they answer a question, that exhale could be very telling to me. Are they about to be vulnerable? Are they about to share information that they initially didn’t want to? If somebody takes a big inhale before they answer, that could be very telling to me. Is that resistance like, here we go? Like they’re taking in that energy in order to defend whatever point or idea that they have. And those are things that I would certainly miss if I had somebody on speakerphone. So if we’re on the phone, limiting distractions. I’ve got ADD, so if I’m facing a window while I’m talking on the phone, everything that goes by gets my attention. So I wanna make sure that I’m looking in a direction where I minimize the distractions. I have the phone to my ear so I can pay closer attention.
Izach – 00:29:45:
Gotcha. All right. That’s super interesting. That’s exactly the opposite of what I thought you were going to say. you know, just relative to the ability to perceive those differences in person. Yeah, it would have, my, my assumption would have been, it’s much easier in person to pick up on all those cues.
Michael – 00:30:01:
In person, you have more cues to pick up on.
Izach – 00:30:04:
Michael – 00:30:06:
but you also have more going on in the conversation.
Izach – 00:30:09:
For sure. Yeah.
Michael – 00:30:11:
So now, how, and I’m not going to go too far off the deep end, but how distracting is the environment? How prepared are we with what we want to think, say, and do? The types of cues they’re giving off, how consistent are they? How easy are they for us to pick up on? The more we start limiting variables, the more successful we should be at handling the variables that are left for us to address.
Izach – 00:30:33:
Okay. That makes sense. All right. And then how about written communication? We do a lot by email. What are things to look for in written communication that are clues to somebody’s level of sincerity?
Michael – 00:30:47:
Sure. Look for commitment. Are people being evasive? Are they equivocating? Are they showing the appropriate levels of commitment? To your point about a dude just sending you an email, saying, I’ll give you $60 million right now. That’s your opening email? Probably not. So that’s an inappropriate level of commitment going the other way. Again, are they asking appropriate questions? Are they using appropriate language? So for people who have hobbies, specific interests. We all have our own codes, our own lingo, our own words that we use. So people who have e-commerce businesses, and this might be true depending on the industry or the niche that their business is in, they likely have their own language that they speak. Because business have their own language that they speak. So are they using the right language? That’s a big one. We have to be a little bit careful. I know you mentioned international. If English isn’t somebody’s first language, it’s gonna be a little bit different. Obviously, tone doesn’t always carry through. But are they using the right language? Are they asking the right questions? Are they committing to the appropriate amounts of detail or the appropriate commitments, if you will, at different points in the conversation? There are certainly other techniques to use. I mean, we could nerd all the way out to average sentence length and words and structure and those kinds of things. But really, I’m looking for The big ones that I already mentioned, but then I’m also looking for specific word choice. Are they leaving themselves wiggle room? That’s not what I meant. That’s not what I said. I actually meant this. It was actually that. Those type of equivocations, especially in writing, give people that wiggle room to say, I wasn’t lying, I was misunderstood. So that’s a big one. And then although it’s hard to judge tone, I am looking for people’s need to control or dominate the conversation based on how they write. And then I can use that against them. I’m not gonna fight them for that control. If I get the idea that somebody really wants to dominate a conversation, great. you can dominate this conversation and allow you to dominate it all the way to where I need it to be. Because you feel like you’re in control of the conversation so I can use that to my advantage. So those are a few thoughts off the top of my head. There’s, and I can show you these resources if you want, but there are some. pretty credible, pretty to very credible resources out there in the world of investigation for statement analysis, where you can literally rip apart somebody’s statement for ideas of how honest are they being or not. And most of these were written around, like written statements that police officers get in their investigations. But there are things that tie over. Pronoun usage is a big one. I probably should have said that. Pronoun usage might be among the biggest. Are they using the right pronouns or are pronouns missing altogether?
Izach – 00:33:46:
So give me an example of what that would look like.
Michael – 00:33:49:
Let’s say somebody reaches out and said they’re interested in buying a business. So are they using I, are they using we? That’s an easy one. Do they appear to be representing themselves? Do they appear to be representing somebody else? As their email correspondence continues over multiple messages, do those pronouns change? Do they go back and forth between the plural? We, us. in the singular, I, me, that might be an indication that they are talking about representing somebody who doesn’t exist or actually representing themselves and making it sound like there’s more people.
Izach – 00:34:25:
Totally. Do they go? That’s a great point. And I’ve actually seen that exact situation. picked up on it as weird. I think I just intuitively knew it was weird, but that’s something like to look out for directly. I love that.
Michael – 00:34:38:
Yeah, that’s a big one. Do you go from us and we to they and them? So all of a sudden we are on the same team, then we’re not, or we never were and now we are. So that type of pronoun switching can be a big one. Especially for owners of difficult decisions, sometimes there’ll be no pronoun. So instead of saying I made the decision or we made the decision, it’s just the decision was made. Oh yeah. And so now, well, who made that decision? Where did that come from? So missing pronouns will be another one that jumps out to me as well as somebody using active or passive language. A funnier example from an investigation I was part of years ago was instead of somebody saying I stabbed him, they said that’s when the knife cut him. It just got up, walked down the table, plunged itself in the dude’s arm. Like, I just do that sometimes.
Izach – 00:35:35:
All right, well, a couple other things that come to my mind. So you wrote a book and that was kind of my, one of the things I was really interested in. It’s called the Disciplined Listening Method. Tell us a little bit about what the Disciplined Listening Method is and what the kind of the guidance is in the book.
Michael – 00:35:56:
I appreciate you asking that. So the Disciplined Listening Method is the culmination of my experience in research, integrating non-confrontational interview and interrogation techniques with business communication skills and best practices. And the two main tenets of the Disciplined Listening Method are, number one, always looking for hidden value in our high impact conversations. There’s more out there that we have to learn, to know, to understand, how do we put ourselves in a position to capture that. The second is to create the communication experiences that our counterparts need in order to feel comfortable sharing the information or making the decision that we require. It’s kind of, well, this might be a funny analogy, but when you talk about a lot of our business and even personal conversations, everybody we speak to has essentially been Mirandized in their lives, especially when you talk about buying and selling businesses because people know everything they say can and will be used against them at your very first opportunity. So they’re generally motivated more so to withhold information than they are to share it. That doesn’t make them liars. That doesn’t make it bad people. But now if we start looking at how do we elevate our situational awareness? How do we start developing our strategic observation skills? How do we start becoming more persuasive communicators and encourage people to save face as they share sensitive information under vulnerable circumstances in the face of consequences? These were really the principles that went into writing the book. kind of got to the point where I had to ask the book when I kept getting asked some variation of the same question, which was how do people consistently go into conversations? where odds are they’re not gonna get any information. and they come out with… much more than was initially thought of or concerned or worried about. And by the way, it’s all written down. How do they do that? How are they preparing, communicating, and following up from conversations to create those results? And that is what inspired the Discipline Listening
Izach – 00:38:00:
Method. Okay. So people who maybe intuitively understand this methodology, who have learned it, get more information out of the conversation than. than their counterparts would.
Michael – 00:38:14:
Not only do they get more, but it’s more valuable, and the people who give it to them feel better about sharing it.
Izach – 00:38:22:
That’s pretty valuable. That’s pretty valuable. Because I think from a buyer’s perspective, you know, I’ve talked about from a seller’s perspective and how do we… pick the good buyers, right? The flip side of this is, buyers are doing the same thing with the sellers. Buyers want to understand that the seller is accurately representing the company, that there’s no hidden issue in the business that’s gonna surface after the purchase, and rightly so. So the buyers also, so maybe let’s just spend a few minutes just talking about it from a buyer’s perspective, what type of questions, and I think the same methodology probably applies, if you’re a buyer listening to the show, you can ask some baseline questions on the initial seller call to kind of establish that neutral ground, and then dig into deeper questions. But good buyers are often pretty skeptical. They have a lot of questions. Sometimes they have tough questions. They’re trying to get, if they’re really intent on buying the business, They’re usually going to absolutely want to uncover any issues that are in the business past, present or future to the extent possible. And they’re going to try to get the best deal possible. They’re going to try to negotiate in their best interest. So sometimes a good buyer can sound sometimes even abrasive to a seller when they’re trying to do that. But I think this non-confrontational question asking method could be a lot more effective because as soon as the seller feels like the buyer is being aggressive, they put up a wall and they don’t want it. Then they’re like, they get nervous. I don’t want to share this information. I think that guy’s just plugging me for information could actually be the buyer. What the buyer is really trying to do is just see if there are any skeletons in the closet that haven’t been disclosed or you know, anything like that. Right. So. Does that resonate with you? Would the same methodology apply equally well from the other side of the table?
Michael – 00:40:17:
100%. Think about it like referees instruction to fighters. Protect yourself at all times. That’s what both people are supposed to be doing. So yes, if we do come across abrasive, then we should expect people to be on the defensive. And once people are put on the defensive, they’re going to be more skeptical. They’re going to start withholding more information. So the key is, how do you help people feel more comfortable sharing sensitive information that could potentially make them feel vulnerable and could lead to potential consequences? On the seller side, as we’ve been talking about, is this a real buyer? Are they good on their word? Do they have the money? Do they have the capability? Can they deliver? And in some situations, can they steward the business in the direction that the seller wants the business to go?
Izach – 00:41:02:
Yeah, you’re right.
Michael – 00:41:05:
All of these things are important. Now on the buyer side, am I buying what I think I’m buying? And all the details underneath that. So to talk about from the buyer standpoint, one of the inquiry related themes of everything we do is illustrate before you investigate. If I can demonstrate some, if I can illustrate some sort of understanding of the situation prior to asking the question, then I should do a better job reducing somebody’s resistance to answering prior to ever being asked a question. I’m literally working to align their self image with answering the question before they ever ask.
Izach – 00:41:43:
Illustrate before you investigate. Okay, give me an example. That’s awesome. I like that a lot because I think I understand it, but maybe give me an example of what that looks like in a conversation.
Michael – 00:41:54:
Sure, so if we do an example for buying a business and if this isn’t as on target as you want, give me another example and I’m happy to do it again. Let’s say that I have somebody who is interested in buying a business, they’re looking at the revenue numbers, they’re all there, they’re consistent, but one of their concerns might be, okay, how many of these customers are relationship based? And once this business is sold, are they gonna travel with the business to the new owner? Or are they gonna punch out because the relationship they had with the previous owner isn’t there anymore?
Izach – 00:42:28:
Good example, that’s something that can come up as a concern for sure in our deals.
Michael – 00:42:33:
Okay, so I’m sure no selling CEO would want to be asked and necessarily answer truthfully depending on the reality of the situation. So I’m just curious, how many of these customers have you personally cultivated through your relationships over the last 10 years or so and are likely to leave when you leave? It’s a very fair question to ask, but now how do I feel answering that? But if I flip that now and say, as part of the buying process, Onboarding Companies, working with Different Organizations throughout the years, one of the things that we’ve seen is critically important to understand and actually appreciate is how hard founders have worked, sometimes for decades, to cultivate trusting relationships with customers and sometimes even within industries. And those relationships that they built carry through to support year over year over year reliable revenue over time. And there have been occasions where the founder sells the business and a larger than anticipated chunk of customers walk away because their relationship wasn’t necessarily with the product or service, it was with the founder. So I am curious, Isaac, as you look back over your growth and success, if you had to say what percentage of your current customer base is a direct result of your networking and relationship building efforts?
Izach – 00:44:04:
That’s a really interesting example. Do you think that the… seller when you ask the question the second way is. more likely to answer completely transparently then?
Michael – 00:44:18:
I think completely transparent might be a dangerous bet. more honest, I think is a good bet because we’re demonstrating understanding, honestly giving them credit for the work that they put in.
Izach – 00:44:29:
The way that you phrase that about how you’re kind of almost, it’s a little bit of like stroking their ego of like, Hey, you, you built this business through your hard work and, and efforts. And then, but, but you are communicating to them what your potential concern is. I’m wondering like, what if you just… without asking the second part of the question, just, you know. How hard has it been for you to build this business and bring in these customers over the years? and
Michael – 00:44:58:
I think that’s a fair question as well. I would have, whatever somebody’s comfortable with, when I was coming up with that first question, I wanted to do two things. I wanted to, I guess three, I wanted to ask the question in a way that reduced their resistance to answering before I asked the question. So stroke their ego, show that understanding. Then I wanted them to give them the opportunity to answer the question in a way that gives me the chance to judge how transparent and honest they’re being, but build something to work on. Let’s say I really want to buy this business. And this founder comes back and tells me, well, you know, that’s a really good point, a really good question. You know, I’d say, yeah, it’s probably fair to say that maybe half the customers over the last 10 years or so, yeah, you know, the relationships I’ve worked hard to create. Now that might be a spot on number or he might be minimizing. So for the safety of the buyer, let’s just say if he says 50 assume it’s 65 I don’t know that to be true, but it could be a safer assumption. But now if I really want to buy the business and I know that maybe 60% of the customers that he currently has are a direct result of him, I’ve got decisions to make. How am I going to maintain the relationship with the founder? What does the founder need to experience as he sells his business in order to advocate for me to this 60% of his customer base? Is the founder willing to stay on for a certain period of time after in order to cultivate these relationships? So I want to ask the question in a way that not only gets me a more accurate answer likely, but also opens the door to those conversations based on how I ask the question and how he answers.
Izach – 00:46:41:
Yeah, that makes a ton of sense. In practice, that’s what we see, right, is that. when you’ve got a founder who’s been directly, and is really actively involved in the business or the generation or customer creation, there’s just a longer transition period that’s usually required for them to give them. But I like the way that you kind of structured that question, almost created an exit ramp for them to give the information, but then tease it up for… Well, how do we work through that then? Yeah. Yeah. So let’s just talk about human nature for a second. Do you think that as humans, we want to believe other people and because maybe we wanna just sell our company, that clouds our judgment? Like, are we predisposed to assume people are being honest? in general or the other way? Are we predisposed to assume people are being dishonest?
Michael – 00:47:32:
It’s been scientifically proven that we’re predisposed to believe that people are honest.
Izach – 00:47:36:
Michael – 00:47:37:
Tim Levine has his Truth Default Theory and Truth Bias, which is 100% built around the concept that we walk around every day under the default assumption that everyone we talk to is essentially going to be honest with us, unless something triggers us to begin thinking or believing differently. Something doesn’t feel right, something’s a little bit different. Now I need to turn my radar on. So you are 100% spot on. As human beings, we are naturally wired to believe people are likely being honest with us. Because if we break it down, the overwhelming majority of the time in our life, people are being honest with us. And then if we break down the time people aren’t being honest with us, the overwhelming majority of that time, it doesn’t matter. It has no impact on our life whatsoever. So there’s this very small sliver of communication that we experience where people are lying to us and it has a potentially negative impact on our life. Therefore, we’re not typically in tune to it. We’re not typically looking for it.
Izach – 00:48:35:
That’s awesome. I love the science behind this whole conversation and how strategic I think we can get with just a little bit of knowledge around around how people talk and the process. So let me ask you this, what’s the best way for listeners to connect with you or to find your book or to find?
Michael – 00:48:58:
I appreciate you asking. Thank you very much. If they’re looking to find out more about our training and advisory services, sales and negotiation, leadership, communication, candidate interviewing, they can find that at InQuasive.com. I N Q U A S I V E.com. If they’re looking for more about me, they can check out MichaelReddington.com. They can find all the media and articles and everything they’re looking for there. The book, they can learn more at DisciplinedListening.com as well. I’m on LinkedIn, Michael Reddingtons CFI is where they can find me on LinkedIn. If they’re looking to connect there and the book, The Disciplined Listening Method: How A Certified Forensic Interviewer Unlocks Hidden Value in Every Conversation is available on Amazon and Barnes and Noble.
Izach – 00:49:49:
That was Michael Reddington. You can find him at MichaelReddington.com. Thanks everyone for listening to this episode of the Deal Closers Podcast brought to you by WebsiteClosers.com. If you like the show, be sure to rate us, write a review, press the follow button and share it with your network. And of course, if you’re looking for help selling your e-commerce or technology business, be sure to visit WebsiteClosers.com. This Episode was edited and produced by Ear Fluence. I’m Izach Porter and we’ll see you next time on the Deal Closers Podcast.