When you decide to sell your business, you have thoughts about the buyer you would like to find. After years of blood, sweat and tears put into a business, it is normal to want someone to purchase it who appreciates what has been done and who can maintain the same quality of goods and service you have worked so hard to develop.
When you listed your business to be sold, you chose a professional, qualified business broker who is eager to sell your business. You signed a listing agreement with that company, which gives the business broker the authority to actively seek a buyer. The broker will spend time getting to know you and your business. During that time, you will discuss what you are looking for in a buyer. For some businesses, there are many qualified buyers and for others very few.
An important part of a business broker’s job is to qualify buyers. After a buyer completes a buyer profile form, the broker will discuss further the type and size of business for which he/she will be able to purchase. All information obtained from the seller and the buyer is confidential. Of course, an important consideration for you will be that the buyer has the financial ability to purchase the business and enough working capital to keep it going. As part of the listing process, the seller should decide if he/she will take a note and for how much from a qualified buyer for part of the purchase price. Sometimes sellers have a fear of doing that and want all of the money at closing. There are several advantages to a seller when carrying a note. The closing can be quicker, as sometimes loans from financial institutions can be very slow to obtain. It can keep the seller in touch with the buyer to insure the business continues or improves. The seller will want to require regular financial statements and inventory figures to make sure the business is not failing. An important fact about carrying the note is the down payment will be high enough that the buyer will not want to lose it. The worst thing that can happen is the buyer will fail and the seller will again own the business. If enough checks and balances are in place, this is unlikely to happen; but if it does, you want enough down payment to make it beneficial to you to run the business while you are selling it again.
Just as it is important for all sellers to be involved when listing a business and know who has the legal authority, it is equally important for anyone associated with the purchase of the business to be involved from the beginning. You, as a seller, want everyone involved to meet together with you when looking at the business, as you want assurance a silent partner will not come forward later and kill the deal.
For some businesses, it is absolutely necessary to have knowledge of the type of business and experience in order to purchase it. For others, it is not quite so important. For many businesses, management experience would be able to transfer from one business to another. Sellers are expected to train buyers in the operation of the business after closing. The number of days or weeks will be agreed upon in the Letter of Intent or Purchase Agreement. Never allow the buyer to work or be trained before closing.
When a business broker schedules a meeting with you and a buyer, that buyer usually has a serious interest in your business. If he/she has a background in your type of business and has financial means or the ability to obtain finances, it appears to be a good fit. When a seller meets a buyer, a first impression is made but could change after exchanging questions. A confidentiality agreement has been signed by the buyer and discussed with the broker, so do not be afraid to share your information.
Remember, you decide who buys your business. A business broker has decided a buyer is a good fit for your business; but selling your business is a personal thing. When a buyer and seller are comfortable with each other, it makes for a win, win transaction.
