6 Answers Every Buyer Needs to Hear

Ready to sell?  Be prepared to answer some important questions.

Selling a company means being prepared to answer tough questions from potential buyers. It's important to be confident, be prepared, and have all of your company's relevant information available to disclose. Assume that the truth would be uncovered during due diligence, and offer it freely. This will build trust and contribute to a speedier transaction.

 6 Answers Every Buyer Needs to Hear

 We’ve worked with a diverse group of buyers and a diverse group of sellers and it often boils down to some common questions that when answered honestly, can kick-start a successful process. 

1.       I’m selling my business because …

This is a basic question you should expect to answer.  The reasons might be personal, professional or financial and could include health issues, retirement, divorce, relocation, or even burnout. A buyer wants to know that there are no hidden agendas behind your decision to sell so be forthright about your motives and help the buyer feel confident in their next move. 

2.       When I sell my business my customers will …

Many small and mid-sized businesses are built on strong personal relationships between supplier and customer.  You might even be on a first name basis with all of your customers.  A buyer wants to understand the value of your relationship and how a change in ownership will impact the relationship your customers have with the company.  If your company has a few large customers who represent a significant percentage of your business, a buyer will want to know how you plan to transition those relationships to the new ownership. 

3.       When I sell my business my employees will …

Buyers know that it’s important to retain employees who play an important role in your company.  If you rely heavily on only a few employees to possess the technical knowledge or relationships vital to your business success, a buyer has every reason to be concerned about the impact of losing those key people.  When you go will those important employees go too?  Retention bonuses, non-compete agreements, and reassurances are important strategies to ensure employees stay with the business.

4.       Recent changes we’ve made to the business are …

Trends in sales, gross margin or profitability provide buyers with a forecast for the business and indicate company value for the sale.  It is common for buyers to assume that trends – positive or negative – will continue.  Be prepared to offer insight into recent trends and where you believe they are in their lifecycle.  As the expert on your business, your intuition will help a buyer understand what they have to gain by becoming the new owner. 

5.       Next year’s revenue is projected at …

When it comes to revenue forecasts, the buyer is looking for sound projections based on reasonable assumptions.  An unrealistic forecast will raise suspicion and they may suggest an “earnout” which means that a percentage of the purchase price will be contingent on your projections being accurate.  It’s ok to demonstrate optimism, but be realistic and look for outside help in putting these projections together if necessary. 

6.       The company’s growth potential is …

Assume that a buyer hopes to grow and expand your business once they own it.  If they don’t think they can grow the business, they most likely won’t be interested in buying it.  So, it works to your advantage to present viable, and realistic expansion options.  And, don’t be surprised if the buyer wants to know why you didn’t expand yourself if the potential is so good.  Contentment with the current size of the business or an unwillingness to take on additional risks are both valid reasons the buyer will understand.  This again is a good area to bring in outside help to identify opportunities.