Preparing For A Buyer/Seller Meeting
by Steve Wright Ph.d
So, you are thinking about buying a business? Did you know that over the next 15-20 years that an estimated 15 trillion dollars of business assets will be transferred through business sells? The primary driver of the business transfer tsunami is the aging and retiring of baby boomers.
There are approximately 12 million baby boomers that own small businesses. 70% of them will be retiring in the coming years meaning that trillions of dollars will be transferred. This fact along with many other contributors means that now is perhaps the best time ever to purchase a business.
Finding The Right Business
Buying a business does have some similarities to buying a house. One of the similarities is the overwhelming shopping process. If you are not careful you can shop online for months on end, while many of the great profitable businesses are sold and transferred to new owners. This happens often in real estate and the business markets.
Serious home shoppers have one thing in common: They close the laptop at some point and they go look at houses with a real estate agent. If you want to buy a business you will need to contact a broker, meet with them and set up a buyer/seller meeting.
Simply put, a buyer/seller meeting allows potential buyers to meet the owners of the business you are interested in. Your business broker will set up the meeting and attend the meeting with you. This meeting allows you to ask pertinent questions related to the history, staff, business systems, business growth opportunities, marketing strategies, financials and etc.
Also, the buyer/seller meeting allows buyers to see the business through their own eyes. When my wife and I buy a house, my wife always wanted to see the house to see if she could see our family in the house. Where will the furniture go, which kid matches each bedroom etc? Bottom line, you as the buyer has to be able to see yourself in the business.
An active business broker will receive hundreds of inquiries each month for the businesses that she or he has listed… HUNDREDS. How does a business broker determine who a serious buyer is and who the tire kickers are? Serious buyers are the ones that want to meet the owners.
Preparing For A Buyer/Seller Meeting
Be prepared, be prepared and be prepared! An unprepared buyer is spotted a mile away at a buyer/seller meeting. They show up without written questions, they do not have a place to write notes and the questions they do ask are vague and general.
· Executing Summary or Business Listing Information – When you first inquire about a business your business broker should have sent you an executive summary or a BLI. Bring the executive summary or BLI to the buyer/seller meeting. You are going to want to be able to refer to this document during the meeting because at this point this represents 100% of the documented information that you have on the business.
· Question – The next step after a buyer/seller meeting is making an offer and with a down payment. Let this sink in for a moment. If you are going to make an offer on a business you had better get real answers to real questions. Your questions need to be targeted and precise.
· Take Notes – When you take notes you show great respect to the owner of the company and this build rapport. A business is like a child to the business owner and whom they sell their business to is a big deal. They do not want to hand their baby over to just anyone. At some point you will negotiate pricing with the business owner and the rapport that you build will benefit you greatly and separate you from other buyers.
· Show Honor – I know you have passion and fresh ideas. Everyone knows that when you buy the business that you will have your own flair and that you will implement new strategies to grow the business. The buyer/seller meeting isn’t the time for “peacocking” (boasting) and showing all of your feathers. Take a learners posture during the buyer/seller meeting and learn as much as possible from the seller.
· Never Ever – The buyer/seller meeting is NOT a time for negotiating the price of a business. Many first-time business buyers are simply unaware of the process and sometimes mistakenly mention the price of the business in the buyer/seller meeting. There will be a time to negotiate the price of the business but the buyer/seller meeting isn’t the right time.
It’s That Important
A buyer/seller meeting is as close as you will get to test drive a car. I would never buy a car without first driving it. A buyer/seller meeting allows you to kick the tires, look under the hood and get a first-hand experience to the business.
I would recommend business brokers send this short article to every buyer prior to a buyer/seller meeting. Many buyers have never been through the business buying process and your assistance and education through this process are paramount. When you add true value to others it is always greatly appreciated!