Q.“What questions should I be prepared for during a meeting with a prospective buyer?”

A.The first question is usually; why are you selling your business? The answer is very important. The buyer wants to know what is motivating you to sell now. Is it you, the market that may have passed you by, declining sales, new competitors etc. Be very careful with your response. The answer, by how it is phrased and presented may scare away a buyer before you even get into the discussion.

Also, often asked questions may include;

  • Q. What is the percentage break down of your gross sales per product/service?
  • Q. How did you come up with the sales/asking price?
  • Q. Will your clients stay with the business post transaction and what will you do to help in the transition to aid new ownership in keeping the clients?
  • Q. Will employees stay with the company and who are the most important employees and do they have contracts?
  • Q. What will you do after the sale? This is very important; a buyer does not want to even imagine you might someday become a competitor.

Up-to-date, monthly & yearly financials. They need to be clean so they can withstand a forensic accounting; you are not presenting your tax shelter to a buyer, but a mechanism (the business) that generates cash flow. (see the knowledge center: Preparing Your Business for Sale)

Typically, it is a percentage calculated on a scale by price. 10% for businesses selling under $1,000,000 and a sliding scale per million above. For example on a middle market deal, 5% for the second million, 4% for the third etc. On a smaller, “Main Street” deal, there usually is a minimum price/commission applied or 10%, whichever is more.

The typical lifecycle of a transaction (see the knowledge center, the Lifecycle of Selling a Business) will take anywhere from 9 to 18 months or more, depending on the complexity of the transaction, the amount of work that is needed to make the business marketable and the type of business.

All the industry information, papers and topics discussed, are free for anyone to review. We encourage you to refer this site to any business owner, whether he/she is thinking about or is in the process of selling their business, or is just starting a business, for someday – selling your business is the final destination for all owners.

In addition, you may ask questions on our advice page and one of our business advisors will respond, and if necessary engage in a discussion per your inquiry. You may also request a free valuation on your company. That will require a short phone consultation or personal meeting and current financial information on your company which would include Tax Returns, P&Ls and Balance sheets. There is no charge for any of these services. If you wish to engage us as an Intermediary or on a project consultation basis – commissions/fees would be applied.

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