Selling Your Business? Start with a Buyer’s Mindset

  • By Karen Schorkopf
  • 03 Mar, 2016

Before anything else, preparation is the key to success. Alexander Graham Bell

The first step in preparing your business for sale is to take yourself back to the days when you were a buyer. Jump back into the Buyer’s Mindset!

Having witnessed the birth, acquisition, merger, and sale of many businesses over a 30 year span, I can tell you we all get caught up in our own busy ness and self interest and we often benefit from a little reminder to put ourselves in the other party’s shoes.

Let’s start by doing a little prep work.

These questions will come up . . . and will likely be researched and verified during due diligence process so let’s facilitate your marketing by answering these questions now, thereby improving your success in closing your deal  on terms and conditions that align with your goals and plans.

As a buyer, I will want to know . . .

1.    Why do you want to sell your business?

2.    What was your background before entering this business?

3.    What was your learning curve like and what training will I need and how will I get it?

4.    What were your biggest challenges and why?

5.    What has been the greatest reward?

6.    Would you go back and do it over again?

7.    If you were to stay in the business, what are the top three things you would do to improve performance?

8.    Could the business be duplicated or franchised?

9.    Are your financial records consistent, accurate and in line with tax returns and bank records? Can you explain and verify any differences?

10.Are your sales/revenues growing? Why or why not?

11.What percentage of your revenue stream is recurring and/or based on customer contracts?

12.Is your customer base diversified or concentrated?

13.Is your business geographically concentrated?

14.How are your margins on sales doing/trending? Cash flow? Costs?

15.What kinds of tracking mechanisms and metrics do you have in place to monitor performance?

16. Are there any trends in the industry that a buyer should know about?

17.Are there any regulatory issues or concerns that a buyer will need to be aware about?

18.Who are your competitors? Are there many barriers to entry in the industry? Threats?

19. How many of your employees are long time employees? How many employees work part time vs. full time? What benefits do you offer? Incentives?  Any at risk employees? Any turnover issues? Are you willing to stay on for any period of time as an employee? Will the key management team stay on?

20. Can you provide a good list of your furniture, fixture and equipment? When was it acquired, what is the current value and what will need to be replaced and at what cost in the next three years?

21.  What other assets will be sold with this deal and what would they be worth in a liquidation position?

22.What are the business expansion opportunities? What capital would be required to take advantage of such growth?

23.Talk about your location. Is it optimal? Do you own or rent? Will you sell the building? Is the landlord willing to continue or extend the lease? Would the business benefit from a different location? Is the facility in good condition or in need of repair?

24.Are there any environment risks in the business that will need to be assessed?

25.What has been your experience with lender’s willingness to finance the business in the past? Would your banker be eager to bank the new owner? Would you be willing to provide seller financing to your buyer?

26.Are there any other strategic acquisitions that might benefit from consideration alongside this sale?

27. HOW MOTIVATED ARE YOU TO SELL? WILL YOU DEVOTE THE TIME, ATTENTION AND FOCUS NEEDED TO WORK WITH YOUR BROKER AND THE BUYERS TO EXPEDITE A TIMELY TRANSITION?  

Buying and Selling Businesses in Tennessee

By Karen Schorkopf 03 Mar, 2016

The first step in preparing your business for sale is to take yourself back to the days when you were a buyer. Jump back into the Buyer’s Mindset!

Having witnessed the birth, acquisition, merger, and sale of many businesses over a 30 year span, I can tell you we all get caught up in our own busy ness and self interest and we often benefit from a little reminder to put ourselves in the other party’s shoes.

Let’s start by doing a little prep work.

These questions will come up . . . and will likely be researched and verified during due diligence process so let’s facilitate your marketing by answering these questions now, thereby improving your success in closing your deal  on terms and conditions that align with your goals and plans.

As a buyer, I will want to know . . .

1.    Why do you want to sell your business?

2.    What was your background before entering this business?

3.    What was your learning curve like and what training will I need and how will I get it?

4.    What were your biggest challenges and why?

5.    What has been the greatest reward?

6.    Would you go back and do it over again?

7.    If you were to stay in the business, what are the top three things you would do to improve performance?

8.    Could the business be duplicated or franchised?

9.    Are your financial records consistent, accurate and in line with tax returns and bank records? Can you explain and verify any differences?

10.Are your sales/revenues growing? Why or why not?

11.What percentage of your revenue stream is recurring and/or based on customer contracts?

12.Is your customer base diversified or concentrated?

13.Is your business geographically concentrated?

14.How are your margins on sales doing/trending? Cash flow? Costs?

15.What kinds of tracking mechanisms and metrics do you have in place to monitor performance?

16. Are there any trends in the industry that a buyer should know about?

17.Are there any regulatory issues or concerns that a buyer will need to be aware about?

18.Who are your competitors? Are there many barriers to entry in the industry? Threats?

19. How many of your employees are long time employees? How many employees work part time vs. full time? What benefits do you offer? Incentives?  Any at risk employees? Any turnover issues? Are you willing to stay on for any period of time as an employee? Will the key management team stay on?

20. Can you provide a good list of your furniture, fixture and equipment? When was it acquired, what is the current value and what will need to be replaced and at what cost in the next three years?

21.  What other assets will be sold with this deal and what would they be worth in a liquidation position?

22.What are the business expansion opportunities? What capital would be required to take advantage of such growth?

23.Talk about your location. Is it optimal? Do you own or rent? Will you sell the building? Is the landlord willing to continue or extend the lease? Would the business benefit from a different location? Is the facility in good condition or in need of repair?

24.Are there any environment risks in the business that will need to be assessed?

25.What has been your experience with lender’s willingness to finance the business in the past? Would your banker be eager to bank the new owner? Would you be willing to provide seller financing to your buyer?

26.Are there any other strategic acquisitions that might benefit from consideration alongside this sale?

27. HOW MOTIVATED ARE YOU TO SELL? WILL YOU DEVOTE THE TIME, ATTENTION AND FOCUS NEEDED TO WORK WITH YOUR BROKER AND THE BUYERS TO EXPEDITE A TIMELY TRANSITION?  

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