All potential buyers deserve to be treated with respect. However, these are the 10 buyer profiles your broker needs to handle on your behalf:
1. The buyer tells you that “money is no object”. In dealing with this buyer it is important to find out how much money is available for the purchase of a business. The buyer may be suffering more from a lack of knowledge than a lack of funds. Often a discussion on the process can turn this type of buyer into a willing buyer. At least you’ll discover the amount of cash the buyer has available to buy a business.
2. The serious, and usually young buyer who says he’s going to borrow money from a relative. It is advisable in dealing with these buyers that the broker speak to the relative directly. It is akin to speaking to the bank.
3. The serious, but not always young buyer, who is going to borrow all the money from the bank. A broker needs to know what lending institutions will make small business loans. The broker needs to understand whether the buyer has a chance of obtaining a business loan to move forward or with the seller’s approval, move forward with a combination of down payment, bank and seller financing.
4. The buyer who is going to retire in a few years and wants a business to supplement his retirement funds. The reality is, the business is for sale now and will not be available when this buyer retires.
5. The buyer who represents an investor group or who is looking on behalf of a wealthy friend. The broker needs to find out who the actual investors are and meet with them.
6. The buyer who is very serious about going into business for himself, perhaps because he is unemployed. A great person, but perhaps has little capital. These buyers certainly deserve courtesy, as does anyone, but they need to understand the process of buying a business. It is possible that they have a relative willing to support them in this venture.
7. A buyer who thinks he can buy a large company with no money down. If you cannot get this buyer to accept the facts of buying a business, spending time here might be a waste of time.
8. The buyer tells you he does nothing without his attorney. Legal advice is important and seeking it should be encouraged, but the reality is that the buyer needs to make the decision and that needs to be made clear. It is possible that the accountant or lawyer will not want the responsibility of recommending a purchase of a business.
9. The tire kicker. Determine how many businesses he has reviewed and why he did not buy any of them. If this business comes close to meeting the buyer’s criteria and he does not make an offer, explain to the buyer that you no longer see a need to work with him and why. It may alienate the buyer or perhaps make the buyer realize the need to seriously pursue a business or stop pursuing them at all.
10. This buyer has the desire, need, resources and urgency to buy a business. He or she is the perfect buyer, but is difficult to find in a complete package.
We have a method of evaluating buyers and their likelihood to purchase a business which will help us move as quickly as possible towards a successful sale.