Buying A Business Is Not Like Playing Poker: You Need To Show Your Cards

Buyers, when inquiring about a business, remember that you are asking for confidential information. Even the fact that the business is for sale is confidential and the premature exposure of the sale could damage the business and its owner. You of course will want to know the name, address, financial performance information, rental rates, etc. This information is not available to the general public, so the seller or their broker will want you to sign a non-disclosure agreement, plus know more about you prior to releasing that information.

Our firm, plus most other professional business brokerage offices, will want to at least have some basic contact information, know a little bit about your background, and have some representation from you that you have the financial capacity to complete the transaction, Most of the time, this need not be you providing your tax returns or bank statements, but rather just a signed buyer profile stating that you have a certain amount of money to work with. This seems like a fair request given the information that will be provided by the seller.

What happens if you fill out the NDA with the address listed as the local UPS Store, no telephone number, and a an email address that looks suspicious. The Seller or the Broker has no way to know who you really are and are very likely to not provide you with the information. Same for the financial representation. A bunch of zeros or N/A's inserted on your Buyer Profile form doesn't exactly provide comfort to the Seller and again, will likely result in no response from the Seller.

Now, I certainly understand a buyer's reluctance to provide their financial information if the advertisement is vague and has no financial information. I too would be irritated if I saw an ad/posting for a "Service Company" asking $500,000, with no revenues or earnings listed, and no other description. Beside the fact that I would never have inquired about such a vague ad/posting to begin with, I certainly wouldn't want to provide detailed information about myself not knowing even the type of business or if its profitable. But if by the ad you can determine its likely a fit, then it's time to "show your cards."

Buyers, as well as sellers, may not know how many inquires a business broker will get on a given business either from email or phone, and the frustration there is when they call and forget to leave their area code on the phone number or just include the email address. Business inquires come so fast some days that a business broker may not have time to research just who left a message and forgot to leave pertinent information. For a buyer to be taken seriously and have their calls or email returned in a timely matter, or at all for that matter, it's important for buyers to fill out all the information completely on the NDA and when leaving phone messages to speak clearly, name the business they are calling about and give the area code for their phone number. Business brokers do receive calls from other brokers and agents who pose as buyers in hopes of soliciting their listings, and so vague information will look suspicious to some business brokers and calls may go unreturned for that matter.