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Qualifying Business Buyers: Top Business Broker Discusses Top Strategies


Qualifying Business Buyers

A small business owner recently asked the question on a BizBen Blog post, "how do I qualify potential business buyers to see if they are trueley interested in buying my business?"  To completely answer this question I need to know what type of business it is, the asking price and any special goals the Seller is trying to achieve.

I have had cases where the Seller wanted to make sure all employees were retained, treated well, and the Buyer would not relocate the business. So the Seller was very concerned about who bought the business.

We interviewed numerous Buyers and this Seller hand-picked the final buyer to meet her needs as we had multiple Buyers for this business.

I have had others where all the Seller only cared about was the sales price and cash received at the end of the sale. Every case is unique in Business Sales.

In all business sales I will give a very little general information to the buyer without disclosing the specific business and then ask the following questions to each buyer up front in my first phone conversation.

1. Do you have any experience in this type of business? If they say yes, I want to dwell deeper in that subject. Where, when, how long. I want specifics. If it was local, I will know that company or will be able to research to see if they are telling me the truth or giving me a line. I want to know if the Buyer is REAL.  In all my line of questioning I am trying to determine if I want to spend my time with this Buyer.

2. The second question I ask is; How much liquid cash do you have on hand today? Can the Buyer afford my business? Many initial inquires will not be realistic feasible Buyers. I know how much money it will take to complete the sale, how much money, if any can be borrowed against the business. Why would I even want to give a Buyer the name and address of my business if they can't afford it?

3. In line with the cash down payment, there might be other liquidities a Buyer has to purchase a specific business. Stocks, equities, 401k, etc. Depending on the purchase price (large, small), and the Sellers desires, in many larger transactions, I will ask the buyer for proof of funds before disclosing specific information on my business. A real Buyer will not have a problem with this. Buyers who are dreamers and fakes will fight you on this. Real Buyers who have the money they say they have will not be afraid to prove it to you if the business interests them.

4. Non Disclosure Agreement. After I am satisfied the buyer is real and if the Buyer wants to see my business, I want him to sign a Non Disclosure Agreement. During this part it is important to tell the Buyer to be very discrete when viewing my business. Do NOT talk to my employees or customers. If you have any questions come ONLY to me.

Again remember you need to give the Buyer just enough info on your business to get their attention before you can pull the facts out of the Buyer. Do yourself a favor and hire an experience Business Broker to handle this for you. It is a process to qualify Buyers. You can't successfully run your business and do this competently at the same time

Lee PetsasAbout The Author:  Lee Petsas has been selling businesses with UBI Business Brokers in Southern California since 1981. In 1999 he became the Owner and Broker for UBI. He is still active daily in Listing and Selling businesses. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations. UBI has been in Southern California selling businesses since 1965. You can reach Lee direct at 714-363-0440.


Categories: BizBen Blog Contributor, Deal And Escrow Issues, How To Sell A Business, Selling A Business


Comments Regarding This Blog Post


I only send buyers out on a maximum of three listings at a time, and they should be all the same time of businesses, such as restaurants within a certain food type and price point. Some buyers will want information for all types of business, such as mailbox, fast food, laundry mat, etc. too many listings at one time is overwhelming for any buyer to absorb.


  Helpful Resources To Assist In Selling And Buying California Businesses
Joanne Weber, Broker - Preschool Specialist - Southern California

The Ryan Craig Company is in its 35th year as the recognized expert in Southern California, dealing exclusively in the sale of preschools, Montessori schools, day care centers, and private schools. Our extensive list of references speaks for itself. Phone Joanne at 818-760-3684 for more info.

George Lanza, Business Broker, At Plethora Business Sales

Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.

Steve Zimmerman: Restaurant Broker Specialist

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

Jack Oh, Business Broker - LA, Orange Counties

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance

For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.

Ralph Santos, Business Broker Specialist - Health Care Related Businesses

Using my MBA and my perseverance I will make things happen! I provide business brokerage niche services specializing in the hospice and home health care agency industry in the Los Angeles County or Ventura County areas. For either buying or selling assistance please phone or email me today.

Lee Petsas, Business Broker - Orange, San Diego Counties, Inland Empire

UBI Business Brokers has been successfully selling businesses in Southern California since 1965. Our Agents have over 100 years of experience in selling small to medium size businesses throughout Southern California. We service Orange County, Inland Empire, San Diego. Phone Lee at 714-363-0440.


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