Qualifying Business Buyers: Top Business Broker Discusses Top Strategies
A small business owner recently asked the question on a BizBen Blog post, "how do I qualify potential business buyers to see if they are trueley interested in buying my business?" To completely answer this question I need to know what type of business it is, the asking price and any special goals the Seller is trying to achieve.
I have had cases where the Seller wanted to make sure all employees were retained, treated well, and the Buyer would not relocate the business. So the Seller was very concerned about who bought the business.
We interviewed numerous Buyers and this Seller hand-picked the final buyer to meet her needs as we had multiple Buyers for this business.
I have had others where all the Seller only cared about was the sales price and cash received at the end of the sale. Every case is unique in Business Sales.
In all business sales I will give a very little general information to the buyer without disclosing the specific business and then ask the following questions to each buyer up front in my first phone conversation.
1. Do you have any experience in this type of business? If they say yes, I want to dwell deeper in that subject. Where, when, how long. I want specifics. If it was local, I will know that company or will be able to research to see if they are telling me the truth or giving me a line. I want to know if the Buyer is REAL. In all my line of questioning I am trying to determine if I want to spend my time with this Buyer.
2. The second question I ask is; How much liquid cash do you have on hand today? Can the Buyer afford my business? Many initial inquires will not be realistic feasible Buyers. I know how much money it will take to complete the sale, how much money, if any can be borrowed against the business. Why would I even want to give a Buyer the name and address of my business if they can't afford it?
3. In line with the cash down payment, there might be other liquidities a Buyer has to purchase a specific business. Stocks, equities, 401k, etc. Depending on the purchase price (large, small), and the Sellers desires, in many larger transactions, I will ask the buyer for proof of funds before disclosing specific information on my business. A real Buyer will not have a problem with this. Buyers who are dreamers and fakes will fight you on this. Real Buyers who have the money they say they have will not be afraid to prove it to you if the business interests them.
4. Non Disclosure Agreement. After I am satisfied the buyer is real and if the Buyer wants to see my business, I want him to sign a Non Disclosure Agreement. During this part it is important to tell the Buyer to be very discrete when viewing my business. Do NOT talk to my employees or customers. If you have any questions come ONLY to me.
Again remember you need to give the Buyer just enough info on your business to get their attention before you can pull the facts out of the Buyer. Do yourself a favor and hire an experience Business Broker to handle this for you. It is a process to qualify Buyers. You can't successfully run your business and do this competently at the same time.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Lee Petsas, Business Broker: Southern California Area
Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.
|Chris Seaman, Business Broker: Southern California
Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.
|William Park, Business Broker: Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|Steve Zimmerman: Restaurant Broker Specialist, California
Steve founded Restaurant Realty in 1996. He has personally sold/leased over 1000 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker- An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.
|Rick Carlson, Business Broker - Southern California
You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.
|Mike Brewer: Liquor License Broker, ABC Consulting Service
Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.
|Joanne Weber, Broker: Preschool Specialist, Southern California
The Ryan Craig Company is in its 46th year as the recognized expert in Southern California, dealing exclusively in the sale of preschools, Montessori schools, day care centers, and private schools. Our extensive list of references speaks for itself. Phone Joanne at 818-760-3684 for more info.
|Jim Thomas: Broker Specialist, Consultant - Fitness & Gym Industry
Jim Thomas is the well-known founder and president of Fitness Management USA, Inc., a management consulting and brokerage firm specializing in the fitness, health club and sports industry. He has over 25 years of experience owning, operating and managing clubs of all sizes.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers
People always need to eat; there should be plenty of business. Some restaurant buyers think there is prestige to owning a popular eating establishment. But it isn't an easy business purchase. Peter Siegel, MBA (BizBen Founder, ProBuy & ProSell Program Director at 925-785-3118) reviews this topic.
|Buying A Restaurant With Financing: 5 Options For Restaurant Business Buyers
In this Discussion, Peter Siegel MBA (Business Purchase Financing Advisor at 925-785-3118) discusses financing of purchasing a small to mid-sized restaurant business (with or without real estate). When it comes to financing a restaurant, potential restaurant buyers have many options to choose from.
|Why Restaurant Buyers Typically Fail: Best Pro Tips For Buying A Restaurant
Buying a restaurant (no matter what type) can have many pitfalls, and potential restaurant buyers should know how to avoid getting burned! Several restaurant intermediaries and advisors weigh in on this BizBen Discussion about the best way to find, purchase and run a restaurant successfully!
|Specialty Restaurant Broker Discusses Liquor Licenses & Working With The ABC
What you will read in this BizBen blog post you will probably not find in any manual or set of instructions provided by the ABC (liquor licenses in California). This blog post by Jeff Back (SF Bay Area Restaurant Broker Specialist) at 925-736-8200 discusses this topic of liquor licenses in detail.
|Buying An eCommerce Business: Tips About Purchasing eCommerce Businesses
When buying an eCommerce business several factors come into play: market position, competition, growth areas, recurring customer base factors and ratios, etc. On this BizBen blog post Peter Siegel, MBA (BizBen Director, Financing Expert) addresses some of these eCommerce factors for business buyers.
|Financing The Purchase Of A Frozen Self-Serv Yogurt Shop - Tips For Buyers
Financing a frozen self-serv yogurt shop for can be challenging. Here, you'll learn the real scoop behind financing a yogurt shop purchase to help it be profitable from the start. Peter Siegel at BizBen.com
|Buying A Car Wash: How Much Money Can I Make From a Self Serve Car Wash?
How much money should you expect to make when buying an automatic car wash? While every business is unique, on average, buying a self-serve car wash can be a great investment and income opportunity. Peter Siegel, MBA (BizBen ProBuy Program Director and Business Purchase Financing Expert) explains.
|Attorney Specialist Shares Escrow Instruction Tips When Buying A Business
Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.