If you have put up your business for sale in the marketplace for some time, you must be aware that window shoppers can waste a lot of your precious time. As it is, selling a business can be a time-taking affair, and no one wants to have their time squandered by pretending buyers. That is why most owners prefer to employ a qualified business broker who can weed out the buyers who might show interest but lack the necessary skill set or funds to purchase a business. The task of selling your company has many crucial stages of preparation and planning. So if you have undertaken the grueling job of selling your business yourself, you must learn to see the qualities of a serious buyer and include an efficient screening process in the list of tasks. These are a few of the traits that can help you segregate the serious buyers from the time-wasters.
Previous Business History
Most potential buyers would feel happy to provide details regarding any businesses they own or have owned in the past. It is usually the first among the list of things that vested business brokers cross-check before proceeding further. If a potential buyer claims to have a company with similar operations to yours, it is advisable to search on the internet for signs or details of the firm. Basic research to determine the buyer’s reputation in the market might also be useful.
A search about the buyer’s educational history and certifications might be able to tell you what you need to know. In case the buyer has no previous history of owning a business from your industry, you must ask him or her why they want to buy your company and what makes them think that they can run it successfully after purchasing it from you.
The Buyer’s Financial Capabilities
Asking the buyer about his or her financial capabilities is something you should enquire about before you start the process of negotiation. Enquire about how much down payment the buyer is ready to make, and how he or she plans to finance the remaining amount. You must also ask the buyers to furnish a personal financial statement that gives you an idea of their financial assets and liabilities. They can also be asked to provide any other information that can help you to verify their financial qualification to buy your business.
Serious buyers would not only have an adequate amount to cover the down payment, but they would also have enough working capital to cover the operational costs for a year of ownership. Many buyers might ask you to finance a part of the sale, which is a common occurrence these days. In such a situation you must get further details, such as:
- The amount that they need you to finance.
- The time they need to return that amount.
- Any risks that you might need to assume.
- The time frame for the transition for which you might need to be available in a consulting capacity.
The answers to these questions can be directly related to their investing capabilities and access to funding.
The Buyer’s Knowledge of the Acquisition Process
Most of the buyers who approach the sale process casually are not aware of the intricacies of a business sale and are often unaware of the acquisition process. They are clueless about the framework related to buying a business. Potential buyers who are serious about purchasing your business will be completely aware of the personal and organizational factors that will affect the buying process. They will have adequate knowledge of their due diligence and the various methods of evaluating a business.
The Questions They Ask
Serious buyers would have conducted some research about your company and possess some knowledge about the history of your business, your best practices, and your USPs. They will have additional inquiries related to the operations of the company for the last few years and wish to learn more about it before they proceed with the negotiations. The questions will have a specific intent instead of generalized inquiries about your business. Apart from asking you the reasons for selling your business, some of the topics that the right buyers might ask about are:
- The biggest challenges that you face while running the business.
- Specifics of employment history.
- Nature of relationships with vendors and suppliers.
- Sales trends.
- Avenues of growth in the future.
- Major competitors.
Ensure that you get a non-disclosure signed before you give out any specifics about your business. These questions demonstrate that the buyer intends to gain your trust and ensure that the buying process goes smoothly.