When selling a business it is easy to think that I will sell my business to “the first person to comes along with enough money to pay my asking price.” The sale of a business involves many terms and conditions by both the buyer and seller that must be met to consummate in a sale. Very often as you go through the process of due diligence by both the buyer and seller, wants and needs are uncovered, and potential roadblocks to completing the sale can occur.
Two important elements have a very strong impact on increasing the likelihood of a successful sale of a business. When trying to sell your business are you working with:
- An Interested business buyer
- A Qualified business buyer
As a business broker based in Florida, one of my more important responsibilities when I represent a business owner selling their business is to qualify or “pre-screen” the various inquiries on the business for sale. There are many people that inquire/ask about a business for sale and probably less than 5% of those buyer prospects actually buy a business at all.
A Qualified buyer can mean many things, but having the adequate available cash, equity, financing, special skillset, proper personal family and life situations are important to establish.
An Interested Buyer is one that wants to buy the business. They have seen basic information on the business and based on that, if no significant negatives or unknowns surface, they want to buy the business.
There will always be a lot of due diligence, verification, questions and answers, but this buyers desires to see the process move forward. If my wife and I were looking to buy a new home, and she finds a home that she likes- I am pretty much transformed into an Interested Buyer. I may turn from looking to buy a home to working to buy this certain home. Issues may occur when doing the due diligence on buying the home but I task these as issues to overcome, not reasons to get out of the deal- If I am a truly interested buyer (and or my wife really wants the house.)
When going through proper due diligence many discoveries and discrepancies can be uncovered. When you have a Seller that is truly interested in selling their business and you are working with an interested and qualified buyer, issues uncovered in due diligence are not “Gotcha” moments but rather are business related issues that both parties seek equitable resolution and or explanation on. Issues that surface become hurdles but not roadblocks.
Buying and selling a business is a process. When Selling your business at some point in the process you ascertain that you are working with an interested qualified buyer. From my perspective, having an interested Seller and recognizing that you are working with a truly interested qualified buyer are two important ingredients towards a successful sale of a business.