Selling your business is more than just a financial transaction. As a small business owner, you understand the sweat and strategy poured into building a successful enterprise. When it comes time to sell, you want to be sure your business legacy is passed into capable hands.
As you work through the sale process, you'll likely receive many inquiries from prospective buyers. Determining which buyers are serious about purchasing a business and which are just curious can be challenging. Which buyers can carry on your legacy? How will you know it's the right fit?
If you're working with a business broker, they will likely have a conversation with the prospective buyer before they set up a meeting between the three parties.
These key questions will help you get to know each prospective buyer and identify which ones can offer the right price and carry on your legacy.
Use phrases like, "Tell me more about that" or "Can you give me an example of what you mean?" to help get past the basic answers and uncover more details.
Remember, this is a conversation, so you should also provide opportunities for the buyer to ask a lot of questions as well.
What sparked your interest in my business?
The first question you can ask a potential buyer is their motivation for wanting to purchase your business. It's also an easy way to start the conversation.
There are many reasons someone might want to acquire a business, such as the desire to be their own boss or expand their current company. By understanding the buyer's motivation, you can gauge how serious they are about purchasing your business.
Additional questions to this one might include:
What does your ideal business look like?
What do you know about my industry?
What's your reason for making an acquisition?
Have you made any acquisitions in the past?
Ultimately, you want to know that the buyer is serious about your business and has a legitimate reason for interest. When you ask these questions, listen for specific aspects interest buyers mention. It's a good sign if they talk about strengths you are proud of in your business.
Can you tell me a little about your background?
Another question you can ask a potential buyer is whether they have experience owning and operating a business. This experience will be helpful in understanding whether the buyer has the knowledge and skills necessary to carry on your company's legacy.
Follow-up questions to this one include:
Do you have any experience with this type of business?
Have you ever purchased a business like this before?
How do you plan to overcome potential challenges?
By asking these questions, you're looking for someone who understands the business world and has the skills to navigate it successfully. Remember that even if the buyer doesn't have experience, they may still be interested in purchasing your business if they are willing to learn and grow with the company.
What are your plans for the business after the purchase is complete?
Knowing a buyer's future plans for your business tells you if they intend to grow the business or change it significantly. It also reveals the buyer's vision for the future of your business. Are they looking to expand, maintain, or change the direction of the business?
Here are additional questions you can ask to understand a potential buyer's goals:
What are your long-term goals for the business?
How will you measure success in the first year?
What is your strategy to grow this company post-acquisition?
Would you plan to keep my employees on board after the sale?
Knowing their long-term goals helps you assess whether their vision aligns with yours. These questions can help you align your business's future with a buyer with ambition and a concrete plan to succeed.
Can you describe your due diligence process?
This question shows how thorough the buyer is in evaluating your business. A comprehensive due diligence process is essential for a smooth transition and indicates a well-prepared buyer. You'll also want to assess the buyer's knowledge of the legal and regulatory environment in which your business operates.
Other questions relating to legal and due diligence include:
Are you aware of the regulatory requirements associated with this business?
Do you have any questions about the current business operations?
What is your timeline for completing the purchase?
Handling legal and compliance matters with care can provide a smooth ownership transition. Additionally, a realistic and well-thought-out timeline indicates serious intent and good planning. Be wary of timelines that seem rushed or prolonged without valid reasons.
By ensuring the buyer is well-informed and attentive to these details, you can feel more secure about the future of your business under new management.
How do you plan to fund the purchase of the business?
Finally, you will want to ask the potential buyer about their financial situation. This includes understanding whether they have the necessary funds to purchase your business and whether they have been pre-approved for financing.
Follow-up questions to this one might include:
Can you provide details on your funding sources?
Have you secured the funding, or is it still in process?
How does the financing impact your timeline for the purchase?
Can you provide proof of funds or a letter of preapproval from your financial institution or the SBA?
Your aim is to make sure the buyer has both the financial stability and a practical approach to invest in your business. A well-prepared buyer will have clear, informed answers to these questions, giving you confidence in their ability to purchase and manage your business successfully.
Take the next step in selling your business.
The right buyer is not just the one who offers the best price but the one who aligns with your business values and can carry forward your legacy. By asking these questions, you can narrow the field of prospective buyers and focus on those most likely to purchase your business.
If you're ready to take the next step in selling your business or need more personalized advice, don't hesitate to contact us for a consultation today. Our team of experts is here to guide you through every stage of the process, ensuring a smooth and rewarding business transition.