10 Basic Questions for a Potential Buyer

If you are seriously thinking about selling your business, you will need to be suitably prepared to answer questions from potential buyers. Every business exchange is unique, but there are certain basic questions that are useful in every case. Your readiness for these questions will help you obtain a clearer idea of the market and, in all likelihood, come to an agreement more quickly.


  • Why are you choosing to sell the business?


Selling a business because of retirement, relocation or the death of a family member is a common phenomenon and widely accepted. But, there are also businesses operating at a loss or have some kind of problem on the market. The best thing to do in such cases is to be up front and as clear as possible when presenting the specifics of the situation. Start by emphasizing your business’s strengths and do not forget to mention whatever you believe makes it unique. As soon as the reason that you would like to sell the business is cleared up, the buyer will have all the information, which they will need, at their disposal to decide if it is worthy of investment.


  • Does the business suit me?


This is something that the buyer will decide on their own, but as a seller you can help them reach a decision. You need to have a clear picture of who would be the ideal buyer for your business. They should be someone with the knowledge and capability to operate your business successfully and not someone who simply has the financial means to make the purchase. If they are interested and seem to be suitable for your business, it would be advisable to tell them during your first communication, because no one knows the job better than you do.


  • Is the business profitable?


One of the first questions a potential buyer will ask will have to do with the profitability of the business. They will want you to show them your financial statements, including your income and cash flows. They will want to see a healthy business with steadily rising income each year. Being able to prove the reliability of the business will make a positive impression and could even be the most important factor leading to a successful sale. Even if the financial statements do not reflect this ideal picture (i.e., of a profitable business) you will have to prove whatever you say with convincing and realistic evidence.


  • What is its position on the market?


Is the business uniquely positioned on the market? Does it have the competitive advantage? Buyers will be impressed if your business offers products or services that set it apart from competitors.


  •  Have you determined your business’s market value correctly?


Buyers who know what they are doing will ask you for detailed documentation proving the finances that you present. Can you back up the numbers? In order to make sure that purchasing the business is a good investment, you will need to be sure that the income and profits can be supported in practice. Working closely together with your accountant is absolutely necessary at this stage.


  • Is the business staffed with experienced employees?


A business staffed with skilled and experienced employees can make the difference for a potential buyer. Moreover, when a business has reliable employees, it likewise inspires reliability, trustworthiness, and a relative sense of continuity in its activities.


  • Does the business have an established customer base?


An established customer base that will stay with the business after it is sold is invaluable for potential buyers. It also proves that the business has laid a strong foundation in the market through its loyal group of customers.


  • Can the business be financed?


Acquiring the necessary financing for the purchase of an existing business can be challenging. This leaves the seller with two options:

  • Lower the price of the business
  • Work together with the buyer to get past these kinds of financial challenges

Using financing is becoming more and more popular, since sellers realize that not only does it increase the interest of buyers dramatically, but it allows them to get a better price.


  • What will happen with the rent?


If the business depends on its location, rent may be another crucial factor. Most likely, the lease can be transferred to the new owner. But, before putting your business out on the market, check the terms of the lease and see if it is able to be transferred from seller to buyer. There may be terms, such as guarantees and increased deposits that the seller and buyer both need to pay. If the lease cannot be transferred to the buyer, contact the owner and ask what is necessary for the buyer to do in order to be approved for a new rental agreement.


  • Are there things that I should know which do not appear in the papers?


In the majority of businesses, there are things that only the owners know and are not written down anywhere. It is very important as a seller to be honest with the buyer from the beginning because such information is usually revealed during due diligence. In brief, such things may include legal obligations, financial problems, labor relations issues, a history of bad customer service or other factors that affect the sale of the business. If you try to hide or purposefully put off until later talking about these things, they will come to light at some point, and you will in all likelihood lose your credibility before potential buyers. 

These are just a few of the basic questions that we deal with when it comes to buying and selling businesses. Beyond these things, there are a number of particularities and peculiarities that give rise to further questions depending on the case. Appropriate preparation and presentation of the company to be sold is a process that requires a professional approach and treatment. Business Interval has the experience and technical knowledge to support you in just such a venture.




Essential knowledge before you buy a business



Essential knowledge before you sell a business



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