This summary was prepared to help you present your business at its best. Showing your business is one of the most important steps in the sale process and how it is done will greatly effect the selling price. There are two areas to be concerned with, how the business looks and how you react to the prospective buyer.
Buyers are strongly attracted to businesses that look good. The same principles apply that apply to selling a home or even a used car. If it shows well it will sell and sell at a high price. For the best results, the business must look exceptionally clean, bright and organized. Cleaning, painting (including equipment), carpeting and replacing worn items will greatly improve the success of the sale. Having looked at your business everyday, find a family member or someone you feel comfortable with who will give you an independent evaluation of the visual appearance of your business.
Another factor is the look of success. I remember one business I sold, where the owner had Tiffany lamps, exotic wood paneling, and very elegant furniture in his office. I sensed that each prospective buyer I brought in pictured himself in that office having the same success that the seller had. Of course this was partly a façade but it worked and most buyers judged the business to be very successful when in fact it was not unusually better than any other business. Every potential buyer will picture himself in your business and if it fits the image he has for himself, he will proceed toward buying the business. If the image does not fit, he will walk away even from an excellent business.
How you react to the buyers is also very critical. To be successful you must be friendly and very open. Concentrate on the good aspects of your business but no matter what the buyers may ask answer their questions honestly. Never, with out being asked, bring up the faults of your business and dwell on them.
I have found that the problems you may have with your business are not the same problems a new owner would have so don't discourage them over issues they may not face. You will probably be asked a number of questions which you may feel are not very good questions but answer them as you would answer any other question. Remember that the buyers do not have the same knowledge of the business that you do and a straightforward answer from you even to a dumb question will certainly help them.
Try not to go far beyond answering the questions posed to you. If the buyers are not satisfied with the completeness of your answer, they will usually ask another question about the subject until they are satisfied with your answer. In other words, do not drag on with endless answers to simple questions. Make sure that you ask questions of the buyers, as selling your business will create a long-term relationship with them and you have to feel comfortable with that relationship.
If you are concerned with confidentiality, please inform the buyers of your concern prior to taking them on a tour of your operation. You might also suggest to them that they hold any detailed question until you return to your office.
Try to limit the time you spend with a potential buyer to about an hour or an hour and a half. Typically, this is enough time for buyers to get a good picture of your business. If they are interested, they will ask to spend additional time with you. The first meeting should be conducted during business hours when you are operational. Any further meetings can be conducted after hours when you have more undisturbed time to spend with the buyers.
About The Author: Bob Klien is President and owner of Business Appraisals, providing Market Value business appraisals on all types of businesses. Former President and owner of Business Search, Irvine, California, a Merger & Acquisition firm specializing in the sale of manufacturing, distribution and related businesses, with programs for both buyers and sellers. Phone Bob direct at 949-254-4062 about more information regarding business valuations.
Categories: BizBen Blog Contributor, How To Sell A Business, Selling A Business
Comments Regarding This Blog Post
I always advise the buyer when seeing the business to not speak to the owner or employees when they first go and look at the business, although I can't control what other broker/agents tell their buyers. I caution the seller that it's possible that some numbskull may walk into the business and say, "hey is this the place for sale?" and they should respond, jokingly "hey, everything is for sale for the right place." and laugh it off, and then call me, the broker, to see if it's one of my buyers. When the buyer and seller first meet to start their due diligence, I simply make the introduction, and leave, because I later don't want to be accused that I put my thumb on the scale, and helped the seller make any representations about the business, since I am not an owner and not there witnessing the day to day operations.
You can prepare your staff for s few visits from buyers by having them pose as "insurance agent," "potential customer," "banker," whatever. But, since there could be several visits from several buyers, the business owner may like to tell employees that you have engaged a "business advisor" (the broker) who will be bringing several people through the business who are potential investors with funds to grow the business and prepare it for the future. This is avery positive message for employees to hear and, technically, this is absolutely true. That you won't be involved in that growth and that the investors will be purchasing the whole business is really none of their concern. At all costs, you need to keep the sale of the business confidential from employees until just before the transfer of ownership.