The Dangers of Over Selling

Many years ago, I was involved in a sales call with a prospect that needed a purchase order financing solution in place to be able to complete a large sale. The prospect really wanted to work with us, but in his excitement, she embellished things and oversold us on the opportunity. Here is a small sample of what transpired.

What she said:
1. My business has years of profitable operations
2. My business has lots of assets
3. My suppliers are financially strong and  technically capable

Here is what we found out after the due diligence:
1. The business only had a limited operational history
2. Depends how you "value assets". Many where not valued realistically
3. The supplier companies she worked with had a marginal track record

Initially we were excited about this opportunity. But got less and less excited as new surprises started appearing. Once our due diligence was complete, we found that the real story differed from what the prospect had told us. In fact, it did not look like such a great deal after all. More importantly, we started wondering what other things had been embellished in the purchase order financing application.

Ultimately, we decided not to go forward. Even though the deal was doable, we were now uncertain of what other surprises would be lurking out there. In my view, it would have been better for the prospect to be upfront with us. For starters, we would have determined that they had a good handle of their business since their description would have matched our findings in the due diligence. Obviously, this would had increased their chances of being successfully funded.

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