Questions to expect from buyers – and how to prepare

When you’re selling your business, you don’t want to get caught out with tough questions from buyers – especially not when you’re trying to make a solid first impression. So it pays to be prepared.

Savvy buyers will have questions ready to fire at you from the get-go. Which makes perfect sense. After all, if you were going to commit all that time and money to a business, wouldn’t you want to make sure it’s a good fit for you?

Luckily, you can plan for many of these questions in advance. And with a little effort and honesty, you can provide thorough, authentic answers that will build your relationship with a buyer. The sort of relationship that can lead to a successful sale.

Here’s a list of key questions buyers want answered:

Why are you selling?

Whatever your reason is, try to be honest without casting the business in a bad light. For instance, if you’re selling because you’re not having fun in the business anymore, tell the buyer you’ve lost some of the drive you had, and you think someone else could help it grow and develop. Buyers want to get to know you, so this can be a good time to talk about your background and history within the business. This will help you build trust – the foundation of a successful business sale.

How did you arrive at the sale price?

This is a relatively simple one, provided you’ve followed our guide for valuing your business and landed on a reasonable sum. Just make sure you can justify how you came to the end figure, and be ready to explain this to the buyer.

What are you looking for in a buyer other than the ability to pay the asking price?

If you’re looking for someone with particular skills or experience, say so. If you’re hoping the new owner will keep your staff on, or be super passionate about the industry, let them know. Of course asking price is important – but consider what else will put a buyer at the top of your list.

How is the business performing financially?

You won’t want to open the books until you know the buyer is serious – preferably they’ll sign an NDA before you show them hard numbers. Still, it’s best to be transparent from the start. Early on in the process, be as specific as you can without giving away sensitive information.

How many hours a week should I expect to work in the business?

Buyers want to know what they’ll be signing up for. Tally up your hours, and be honest while also explaining how they could minimise the hours or hire staff to fulfil those duties. Now’s a great chance to talk about other perks, too – like being able to finish early and pick up kids, working from home, or having weekends off. Paint a picture of what your day-to-day looks like, so buyers really imagine themselves in your business.

What are your biggest challenges?

This can be a tough question. You don’t want to scare buyers off. But if you’re not open about the challenges, it’s a warning sign to buyers you’re hiding something. Take time to go through what you’ve found most difficult, and then explain how you’ve overcome those challenges. If it’s about having certain skills, drive or experience to master these, paint a picture, as the right buyer won’t see them as something they can’t overcome. Buyers are interested in what opportunities are dormant within the business – they don’t expect it will be completely flawless. That’s why honesty is the best policy.

Would you stay on for a transition period?

This is totally up to you! If you’re happy to show them the ropes, say so, and tell them for how long. If you’re looking for a swift handover, also be clear about it.

Are you willing to agree to a non-competition clause?

It’s reasonable for the buyer to ask that you don’t go into competition with them. If you’re not willing to agree to such a clause, be prepared to respectfully explain why.

Do you have key customers/vendors/staff? Are they aware you’re selling?

Buyers are often worried your connections and know-how will leave along with you. The onus is on you to prove how the business will continue to function after you leave. Again, be straight with the buyer, but also tell them of any opportunities the changeover could provide. Maybe it’s an opportunity to build relationships with other suppliers or vendors offering great products or services.

What are you currently paying yourself?

While working without a salary is just a fact of life for many business owners, it does impact on a business’s value. It’s best to be frank about how you work within your business, what you take home money wise, and ways the buyer could change things up if they wanted to. Remember, savvy buyers will quickly work out if the number of hours you work don’t align with what you get paid. Be prepared for the buyer to walk away if you’re not answering truthfully.

While the above isn’t an exhaustive list, it’s a good place to start. Take the pressure out of those initial conversations and write down your answers ahead of time. Keep that list handy when you chat with buyers.

If you take some time to get prepared, you’ll be well-placed to earn the trust and respect of a potential buyer. And if you earn those, there’s a much better chance you’ll have a smooth sale.