Qualifying Business Buyers When Selling A Business
When the time comes to sell your small to mid-sized business, there are a number of things that you can do to prepare for the volume of inquiries that you will be receiving from potential business buyers. Once you have prepared your business for sale, it will be critical to compile all important information about your business to have in hand when speaking with qualified buyers via phone, email, or text.
Gathering information such as your profit and loss income statement, lease, value of your equipment, and inventory levels will allow you to speak accurately about the state of your business when the time comes.
Before revealing too many details about your business to potential buyers, you must first carefully vet and qualify these buyers by asking them a number of questions and obtaining specific information from them.
When qualifying candidates, you will want to ask them about their experience and background. Do they have experience owning or operating a business? Do they have industry experience or training? How long have they been looking for a business to buy? Have they made any offers on other businesses?
You will also want to find out their time frame for acquiring a new business to determine if that is in line with your plan to sell your business.
This information allows you to gauge their interest in your business and opens the door for you to obtain the critical information that is required to qualify them for this purchase. The information that will allow you to move forward with the process, execute a non-disclosure agreement, and share details about your business will include their past and current financial information.
How much liquid cash do they have to pay toward a down payment and how will the remaining balance be paid? Do they plan on obtaining financing, either through a loan or SBA financing, or will they require seller financing? What assets do they have to provide as collateral, if any at all?
If any potential buyer is unwilling to sign a non-disclosure agreement or provide you with their background or financial information, you should not disclose any further details about your business and be skeptical of their intention to buy your business.