If you are trying to sell your business the first hurdle is finding serious business buyers, not just vaguely interested parties.
When you put your business on the market you are probably doing so at the same time as trying to ensure its continual smooth running.
However, just as when you are selling your house or car, there is a risk that you will attract lots of window shoppers, or tyre kickers, but not many ‘ready to go’ buyers. This can be a huge pressure on your already stretched and loaded working day!
As a successful business brokerage, A2Z Business Brokers has extensive experience of the overload this type of situation can put onto the prospective business seller and so we are keen to alleviate it in any way we can.
Having business listings on the internet can make the situation even worse, but from experience we know that, through the introduction of a few basic principles into our sale process, we are able to sift out those genuinely interested potential buyers from those who may be browsing and clicking whatever takes their fancy. In the business sale market – the ‘quality’ of a purchaser is by far more important, in general terms, than ‘quantity’!
We can see from our own statistics that applying these principles causes around 80% of purchasing enquirers to fall at the first hurdle, leaving a remaining 20% of genuine potential business buyers to move on to the next stage.
This remainder are more likely to have considered what type of business they are interested in buying and potentially have actually thought about the purchasing process. That is:
- who they are going to use for professional support (legal and financial)
- where the money to make the purchase is coming from
- how they are going to carry out due diligence
If a potential purchaser has already considered such things, the sale process can progress at a steadier pace (we do not mention faster, but definitely steadier), relatively free of time-consuming hiccups such as them not having appointed a Solicitor early enough in the process. This again is supported by our figures: in 2013 we found a minimum of 1 in 4 enquirers who had completed our steps went on to seek further specific information regarding the business they were interested in.
What does this mean to the business seller? Well, instead of receiving 100 ‘possibly interested’ enquirers, you may receive 5 who are actually ‘ready’ to make you an offer if your business fits their requirements. In other words, instead of 95 wasted conversations, you have 5 meaningful conversations. As a busy business owner, we are sure that makes sense to you!
Now there is no fool-proof system to establish whether an enquirer is serious, or just a window shopper, but at A2Z Business Brokers we apply tried and tested rules that fall under two main headings: Confidentiality Contract and the Team Test.
1. Confidentiality Contract
We ask all potential business buyers, expressing an interest in one of of our businesses for sale, to complete a non-disclosure agreement (NDA), before they receive anything other than the basic advert information.
This requires that they supply their name, address and other contact details plus any details of a company or other body they may be applying on behalf of. This requirement isn’t particularly onerous, but it is funny how many people are able to fill in a form on the internet with a few clicks, but when it comes down to signing a piece of paper, they seem to lose that desire to pursue their interest!
2. Team Test
The most indicative part of our process, which really does identify the genuine ready to go enquirers, is asking for details of their business buying team – those who will provide professional and other type of support to the purchase. As a minimum, we would expect to see an Accountant and a Solicitor named. That is, the people who are essential (generally) in getting the sale completed. We also expect the potential purchaser to provide a character reference, but make it clear we do not ask for those until the enquiry progresses to a more serious stage.
There are many enquirers who have not even considered who they would use for professional support (legal and accounting) when they find the business they are after. Which begs the question, if they haven’t considered this… have they considered where their money is coming from to make the purchase?
These two simple elements in the sales process allow the potential business buyers to self select themselves as serious, or not serious purchasers. This approach makes the best use of everyone’s time – it even does the none serious potential purchaser a favour.
If you are a potential business seller and are only looking for serious business buyers then A2Z Business Brokers is the place to start – why not get in touch?