When you’re trying to sell your business, the last thing you want is to waste time dealing with buyers who aren’t qualified and are unlikely to actually make a purchase. After all, you will not want to reveal details about your business to someone who may be looking to take advantage of the situation. Let’s take a closer look at how you can weed out legitimate buyers from those who aren’t.
Legitimate buyers will ask the right questions. They will have a keen interest in your industry and seek to gain more information. They will also be likely to ask intelligent probing questions about your customer base and the strengths and weaknesses of your business.
The best buyers will also ask logistical questions about your inventory and cash flow. They will want to know details about profits that are generated. Real buyers will also be concerned about wages and salaries. Their goal will be to ensure that your employees are taken care of and will be unlikely to quit.
Another area that you can expect serious buyers to ask about is capital expenditures. They will evaluate any equipment and machines involved in the business. They will also likely inquire about inventory that is unusable due to the fact that it is outdated or problematic. After all, if they are truly planning to buy the business, they will inherit any headaches.
Is your business exit ready?
If you’re planning to exit your company in the near future, you may find EastWind’s Exit Strategy Playbook helpful in developing your own exit strategy, making your company more sellable.
A good rule of thumb is to imagine yourself in the shoes of the prospective buyer. What kinds of questions would you ask? If a buyer is asking the bare minimum of questions that only scratch the surface, odds are that they are not really interested. You can expect the legitimate buyer to ask about everything from environmental concerns to details about your competitors.
The best way to evaluate buyers is to turn to the experts. A merger and acquisition advisor will have years of experience talking to buyers and will have a leg up on evaluating who is worth your time and energy.
Further, you would likely be overwhelmed with the process of handling buyer inquiries while you are still trying to effectively run and manage your business. A good M&A advisor will handle your incoming inquiries and only notify you of buyers who are suitable, qualified candidates. They will ensure that the highest standards of confidentiality are held along the way.