The Process of Selling Your Small Business: Step Four- Screening, Interviewing and Qualifying Buyers.
Welcome to Step Four in the process of selling your business on California Business Broker .com. Once a business had been effectively marketed, potential buyers will begin to make inquiries regarding the business. For the seller, this is where the business broker really earns their keep. Studies have shown that in takes, on average, 15 to 25 buyer inquiries before an offer is made. Each inquiry could take a considerable amount of time for that buyer to receive the necessary information they seek. For many business owners, it's not feasible for them to field inquiries regarding the sale of their business and still run their business profitably.
When a buyer first inquires about a business that we represent, the first order of the day is to have that buyer sign a Non-Disclosure Agreement. In addition to the non-disclosure agreement, we have our buyers complete a buyer profile which tells us more about that buyer and the business they are seeking. In my opinion, the non-disclosure agreement is the first step in screening serious buyers from non-serious buyers. Most serious business buyers do not have any problem with signing the nondisclosure agreement. I use the standard
California Association of Business Brokers
When business owners sell their business, they release very sensitive and personal information. In addition, they may release information that is vital to the operation of their business; therefore, we insist on obtaining a side nondisclosure agreement before we release any confidential information to potential buyers.
Once we have received a signed non-disclosure agreement and a completed buyer profile, we send, usually via email, a business profile. The business profiles I create are quite extensive and usually contain a complete financial snapshot, an executive summary, a marketing summary, and most likely some photographs of the business. In some cases, I create and professionally edit a corporate video which allows the buyer to see and interview with the owner and to see the facility and equipment.
Once the buyer has received the profile and has had sufficient time to review the profile, I will contact them and solicit their feedback. The business profile will usually prompt many questions regarding the business. At this point, I respond accurately to their questions, push the buyer to set up and commit to a face-to-face meeting. This is the next step in filtering out serious inquires versus non-serious inquiries. Businesses are bought and sold in person.
If a buyer shows interest, we will then carefully screen them to make sure if they are qualified and capable of buying the business. This will vary depending on the type of business and size of business but usually, this involves examining the finances and the financial capability of the buyer.
The next step in this process is to set up a face-to-face meeting between the potential buyer and the business owner. This, too, depends on the business and needs of the business owner. If confidentiality is an issue, the meeting can be set up after hours or at our office. If the meeting is set up at our office, a time will come where the potential buyer will need to see the facility.
After a face-to-face meeting between buyer, seller, and broker, the buyer may be in a position to make an offer. More than likely, several meetings will be needed but at this point, the buyer will either require more information or be in a position to make an offer contingent on conducting due diligence.
This is another instance where it pays to have a professional business broker working on your behalf. Many buyers do not feel comfortable asking sellers some candid questions. Some buyers feel much more comfortable expressing their concerns and critiques to the broker. Having a professional business intermediary working on your behalf can help flush out the true concerns that a potential buyer may have. Responding to and overcoming objections and concerns are what help get businesses sold.
If you are a business owner and would like a professional business intermediary working hard on your behalf, I would like the opportunity to speak with you. I represent successful business owners throughout southern California and would like the opportunity to learn more about your unique business.
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