Questions we hear from business buyers

We have a highly profitable custom cabinetry and renovations business for sale at an asking price of $3,750,000. The sellers of this business are no longer interested in maintaining ownership, but would consider staying on as employees. While interest in this offering has been strong on the open market, we wanted to let our preferred partners know about this opportunity too.

While we hear a lot of questions and comments from potential buyers about companies we represent, there are several questions that come up time and again. We know from experience that we had better be prepared with answers. Among those questions are the following:

  1. Why does the business owner want to sell the company now? Often the motivation behind this question is to determine whether there is an issue with the business that’s causing the owner to want to exit the company. Sellers must have a reasonable response that addresses their intentions for the future, and indicates that all is well with the business.

  2. Is there a team in place that can assure the continuity of the business? Savvy buyers will want to know that there is a leadership team that can operate the company. This gives the new owner time to gain experience with the company, and to better understand its needs before making any changes that may be necessary.

  3. Are there audited financial reports? This question is often asked about companies exceeding $50 million in revenue. Generally, companies with lower revenue values than that will have accountant or CPA produced Profit and Loss Statements and Balance Sheets that meet the potential buyer’s requirements, as long as they are up-to-date and accurate.

  4. Are there potential flight risks by employees and/or customers? While there is never an assurance to this question, a savvy buyer will want to know about the relationships with customers/clients. They seek to understand if the relationship is with the owner — or with the company. Generally, if the connection is with the owner, the customer/client may seek a new business service provider. However, if the relationship is with the company, the customer/client usually sustains business.

  5. What is the operational system of the company? The intent for this question seems to be to determine whether there are written policies and procedures in place to guide the company’s operations. This question also reflects an interest in learning whether those systems and procedures enhance the operating efficiency of the company.

While these examples are representative of the kind of questions we often receive from prospective buyers, there are many others that require responses from us as the business brokers and/or from the owners of companies for sale. For a discussion about these and other questions business buyers often ask, contact us at Wayne@richbizbrokers or RBennett@richbizbrokers.com