Much like the process of building your business, selling your business is a process too — with ups, downs, twists, and turns. When it’s time to sell your business, finding the right buyers right away is key to getting the deal done quickly and painlessly. How do business owners know which potential buyers are duly qualified and truly interested in purchasing your business? We’ve put together the top questions to ask the potential buyer of your business to help ensure the selling process runs smoothly from start to close.
1. Why Do You Want To Buy My Business?
Of all the questions to ask a potential buyer of your business, this one is the best indicator of the buyer’s intentions and sets the tone for the working relationship you will have throughout the process.
There are a variety of reasons why someone might be interested in buying your business. Your business or industry might complement a potential buyer’s existing business profile, either as an expansion of their client base or moving into new geographical territory, or they might just want assets like equipment or real estate. How a potential buyer responds to this question can be a good indicator of how serious they are or if they’re just nosing around for information (say, if they’re a competitor).
Depending on the direction the conversation takes, some good follow-up questions might include:
How does this company fit with your current holdings?
What are your long-term goals?
How do you plan to successfully integrate this business into your current business profile?
2. Do You Have Any Experience in the Industry?
Before handing over the keys to the business you’ve invested your blood, sweat, and tears into, you want to feel confident that potential buyers have the industry background and experience necessary to maintain successful operations after the transition of ownership.
That being said, a lack of experience in your industry shouldn’t always be a deal breaker. For instance, we’ve seen a lot of success from buyers who don’t have industry experience but are passionate and planned to hire experienced operations managers and staff from the start.
Other questions to ask include:
How many years of industry experience do you have?
Do you have business ownership experience?
What drew you to working in this industry?
3. Are You Going To Operate the Business Full Time?
Building on the answer from Question 2, it’s important to understand a potential buyer’s plans for the day-to-day management of your business. While this might not be important to some business sellers, it is incredibly important if your longtime employees are staying with the business or if the legacy of your business is especially important to you.
Whether or not a potential buyer wants to stay involved with the day-to-day operations of your business will have a huge impact on it’s future. It is important to find out if the potential buyer plans to run the day-to-day or if they’re planning to hire someone else as an operations manager (especially, if the buyer has little to no experience in your industry). Either way, you’ll want some assurance that the business will be in qualified, experienced hands when you step away.
Additional probing questions could include:
What industry/leadership experience will the operations manager have?
If operating the business yourself, how does that commitment fit within your current obligations and capacity?
4. What’s Your Investable Capital to Buy The Business?
Financing a business purchase is not for the faint of heart. If the first three questions didn’t already weed out non-serious prospective buyers, this one surely will. Learning more about how the potential buyer plans to structure the deal will also help you figure out how experienced they are. The answer to this question will also determine whether you’ll need to enlist expert business financing assistance and at what stage of the process.
As the financing conversation evolves, you may want to also consider the following questions:
Will there be investment partners?
Where is the investment capital coming from?
How much cash will be part of the deal at closing?
Bonus: it’s always a good idea to know the market value of your business before you start these conversations. Not only does this help you understand what type of buyer you’re looking for, it also helps you avoid wasting your time on ‘low ball’ deals. Curious about what your sale price would be? Try out our free Business Valuation Calculator.
5. How Are You Going To Appreciate the Legacy of the Business?
Having worked with many business sellers over the years, this is a common thread particularly among long-term business owners who have put their blood, sweat, and tears into their business over many years. For many, the deal that is ultimately accepted is not necessarily the one with the biggest financial payout. Instead, many business sellers want to work with buyers who are committed to the values and legacy that have made the business the success that it is today.
You don’t necessarily have to find someone who plans to maintain the status quo, but it should be someone who understands the core values upon which you’ve staked your business’ legacy; someone who can leverage those values to take the business to the next level — whatever that may be.
The process of selling a business is challenging enough without wasting precious time and energy dealing with incompatible or inexperienced buyers. And finding the right buyer for your business starts with having the right list of questions. The above five questions to ask potential buyers for your business are a great launching point for your conversations.
Having trouble finding qualified buyers on your own? Avoid these challenges and capitalize on the value that an Alberta Business Sales Broker provides. Book a Consultation with our experienced business brokers.