Buyer Questions & Tactics every Owners should be Ready to Answer – Now
Depending on the day, you may be eager to sell your business, and ecstatic to have an interested
buyer knocking at your door…but what’s it really like when an outsider starts looking into every inch of your business?
Most professional buyers have a checklist of questions – both objective and subjective – that they need answered before getting serious about buying your company.
Examples of objective buyer questions include:
- When does your lease expire and what are the terms?
- Do you have consistent, signed, up-to-date contracts with your customers and employees?
- Are your ideas, products and processes protected by patent or trademark?
- What kind of technology do you use and are your software licenses up to date?
- What are the loan covenants on your credit agreements?
- How are your receivables? Do you have any late payers or deadbeat customers?
- Does your business require a license to operate, and if so, is your paperwork in order?
- Do you have any litigation pending?
Then buyers will try to get a subjective sense of your business,
…including figuring out just how integral YOU are personally to the success of your business. That requires some investigative work on the buyer’s part, as well as some tricks of the trade.
For example, be prepared for the following…
Trick #1: Making last-minute changes
By asking to make a last-minute change to your meeting time, a potential buyer gets clues as to how involved you are personally in daily operations. If you can’t accommodate the change of meeting time, they may try to determine what part of the business is so dependent on you that you absolutely have to be there.
Trick #2: Checking to see if your business is “vision impaired”
A suitor will probably ask you to explain your vision for the business – a question you should be well prepared to answer. However, he or she might also ask your employees and key managers the same question. If your staff members give inconsistent answers, the buyer may take it as a sign that the future of the business is all in your head.
Trick #3: Asking your customers why they do business with you
If the interested buyer likes what is found initially, talking to some of your customers is next. He or she will obviously expect you to offer up your most loyal customers and will expect to hear only good things. Your customers may be asked a question like “Why do you do business with these guys?” The potential buyer is trying to figure out where your customers’ loyalties lie. If your customers answer by describing the benefits of your product, service or company in general, that’s good. If instead they respond by explaining how much they like you personally, that’s bad.
Trick #4: Mystery shopping
Potential buyers often conduct their first bit of research before you even know they are interested. They may pose as a customer, visit your website, or come into your company to understand what it feels like to be one of your customers.
Make sure the experience your company offers EVERYONE is positive and consistent.
And try to avoid being personally involved in finding or serving brand new customers. If a potential buyer sees you personally as the key to wooing new customers, they’ll be concerned that business will dry up when you walk out the door.
You may not be expecting a buyer to pop in any time soon, but you should always ask yourself the questions a buyer would be asking you – and your employees and your customers – if he or she were considering buying your business.
As I’ve said before, always run your business as if you were planning to sell tomorrow.