HOW TO PREPARE FOR A TOUR WITH A POTENTIAL BUYER
We often have questions from Sellers about what to do and how to handle a meeting with a potential buyer. This article is to help Sellers prepare for meeting a Buyer for the first time.
This may seem obvious, but it is important and needs to be mentioned. The saying that first impressions are lasting impressions is true. You only have one chance to make a first impression so do everything you can to make it a lasting impression. Make an assessment of where you will be meeting and then take steps to ensure that it is tidy and clean. Having the janitorial staff make an extra stop the day before the meeting is a good idea. If you own the building then make a call to your landscaper/groundskeeper and have him tidy up the outside of the building and clean up any trash that may be around. If you will be meeting in an office then clean that office. Remove the clutter from you desk; dust and organized the files that have been sitting around for a while. All of these things will help make a good first impression and lasting impression on the Buyer’s mind which is what you want to do.
On the day of the tour you will want to dress as you normally dress when you go to work. Make sure your clothes are clean and without holes if your business is more casual. If your business requires business attire, then wear your best suit, shirt and tie. As a broker, I will prep the Buyer as to how he/she should dress to match the occasion. Believe it or not, the Buyer’s also ask me how they should dress. We try to match Buyer with Seller so both parties feel comfortable.
WHAT TO SAY
- Be natural and express the passion you have for the business.
- Highlight the good things about your business and what you do.
- Listen to the Buyer and do not talk over him/her. The conversation should be natural and not rushed.
WHAT NOT TO SAY
- Don’t point out all of the flaws of your business. Highlight the positive. Don’t elaborate on all of the reasons you are selling the business and how much you don’t like your business. There is a difference between being straightforward and being real drag. Straightforward is find, being a real drag is not.
- DO NOT LIE. Buyer’s will sniff out a lie and be onto the next business in the blink of an eye. If you do not feel comfortable telling the Seller a potentially bad piece of information then defer to the Broker.
- Answer their questions but don’t answer the questions they don’t ask. Sometimes Sellers will go on and on with an answer to a question they think is important but that Buyer did not ask. Once you have answered the Buyer’s question then stop. Let them ask another question. Don’t feel the need to blabber on and on.
- Do not talk about the terms of the deal without your Broker. You hire a Broker to represent you so let him/her do his job. You will be far better off and get more money for your business by using your Broker to handle the negotiation.
WHAT TO DO IF YOU GET A QUESTION YOU DON’T WANT TO ANSWER?
Sometimes we get a Buyer who asks a question that the Seller doesn’t want to answer. For instance: “What is the name of your top customer?” This information is proprietory and you as a Seller don’t want to divulge it. If this happens then defer to the Broker. You could say something like: “You are going to have to talk to my Broker about that”. You may also turn to your Broker and say: “What do you think about that?” This is another way of saying: HELP!
WEB SITE AND SOCIAL MEDIA
Take a minute before the tour to go to your web-site and make sure it is working properly and everything is updated. Buyer’s will do due diligence prior to the tour and going to your web-site is very common. Also, go to your Facebook account, Linked In account and any other social media account you have or your business has. Look at each of these and update the information if needed and remove anything that may not be appropriate. I recently had a deal that did not go through because one party did not have a web-site that was working. For weeks the site showed that it was under construction and the other party did not want to deal with it. He thought it was a bad sign as a representation of the Company.
KEEP THE MEETING TO AN HOUR OR TWO
You want the Buyer to see your business and have an opportunity to meet you, but you do not want to make it an all-day meeting. You have work to do and the Buyer needs to assimilate the information he receives. If you give him/her too much information it is the same as giving a person a drink from a fire hydrant—they can’t handle it.
I prep my Buyers ahead of time as to the confidential nature of the tour. Buyer’s should know that they are not to ask questions in front of the staff. The meeting should be held in a place that is without interuption and private. If this is not possible, then have the meeting at a place other than the business.
QUESTIONS FOR THE BUYER
It is a good idea for a Seller to have questions for a Buyer as well. These may include:
- How does the Buyer plan to fund the purchase?
- Does the Buyer plan to relocate to run the business or will he/she be an absentee owner?
- What is the Buyer’s experience?
- What is the Buyer’s motivation for purchasing?
By Rick Krebs, Business Broker
Business Sales Group