Choosing the right buyer for your business should involve much more than price considerations. A complex approach will guarantee much better results, the stability of your company in the long run and the security of your employees.
What are the most important issues you need to talk about with potential business sellers? The following list contains six questions that we believe will help you determine which buyer is the right one.
The Price They’re Willing To Pay
The first and the most obvious (though not the only important) consideration focuses on the price that a potential buyer is willing to pay. How are they valuing your business? Are they open to negotiations or 100 per cent inflexible?
The initial offer you get from a buyer is the highest one. Chances are that the amount will go down during the negotiations. If you aren’t happy with this original amount, you should probably continue looking for a better buyer match.
Keep in mind that there will be some fees and transaction costs, as well. Add these to the calculations, if you want to have an accurate idea about the profit you’re going to make after selling your business.
What Are Their Expectations?
The terms and conditions of the business sale aren’t set in stone. Unless you talk to a potential investor, you will never know what their exact expectations are.
Does the buyer envision keeping you in a managerial position? Will they want to benefit from your experience in the months after the sale? Talk about these possibilities, especially if you plan to make a full exit.
What Experience Do They Have In The Field?
Regardless of the fact that you’re selling the business, chances are that your level of emotional involvement is high. You will certainly want to make sure that the company is going in the right hands.
How much experience does the potential buyer have in the particular field and why did they choose your company? Learning something more about their reasoning and motivation will shed some light on the managerial style and the ability of the buyer to keep the business moving forward.
Will Your Employees Be Protected?
It’s very important to talk about the future of your current employees before closing the deal. Paying attention to this aspect of the business sale is one of the keys to maintaining the company’s stability in the long run.
Does the potential buyer plan to reduce head count or replace some of the key team members with their own staff? You may want to negotiate about these aspects before closing the deal. A buyer that has a strategic development plan may want to introduce some serious changes in terms of human resources.
If you are committed to protecting key, loyal employees, you should find a buyer that will be accepting of your requirement. You may also attempt convincing the buyer in the experience and the knowledge of the current team, which will reduce the likelihood of HR changes.
What’s The Exit Timeline?
How long do you plan to remain in the company after finalising the sale? A strategic buyer may want to keep you around and benefit from your know-how.
If you want to leave the business immediately, you will have to make these intentions known right from the start. Chances are that a buyer, particularly someone that doesn’t have a lot of experience, will want to keep you around. Talk about a mutually-beneficial timeframe that both parties involved will be happy with.
Will There Be Emphasis On Company Culture Maintenance?
There is one final aspect of the sale you may want to talk about and this aspect focuses on the desire of the buyer to maintain the current corporate culture.
Many sellers are looking for buyers that share the same business values and beliefs. This approach creates continuity and ensures the success of the company in the long run. Though it’s probably far from the most important consideration, talking about ethics and corporate values may give you peace of mind.
You’ve created a certain legacy and you may want to pass it to the coming generations. If this is a main priority, you will need to spend some time on choosing the right buyer and aligning your priorities.
Being strategic and thoughtful about every aspect of the business sale will create a smooth transition and give you the best exit from the business. Think about the buyer characteristics that matter the most to you and come up with a profile. Having a good idea about what you’re looking for will speed up the process, streamline the negotiations and potentially make it easier for you to sell the company.