8 Questions You’ll Face When Selling Your Business
When it comes to selling your business, one of the most daunting challenges is handling the barrage of questions that arise during management presentations for potential buyers. It’s crucial to be ready to address inquiries regarding every aspect of your operations. While each meeting may vary, here are some common queries you can anticipate while being in the spotlight:
What is the reason behind your decision to sell your business?
This question can be tricky because if your business genuinely possesses a promising future—and you want the buyer to believe that—then the obvious question arises: “Why do you want to sell it now if it’s doing well?”
What is your customer acquisition cost?
Potential buyers are interested in determining whether you have a reliable, cost-effective, and scalable method for acquiring new customers.
What is your market penetration rate?
Buyers, envisioning future growth, seek to comprehend the size of the potential market for your product or service and the untapped opportunities within it.
Who are the key members of your team?
Buyers aim to understand the expertise and capabilities of your team, specifically identifying individuals who need to be motivated and retained after the purchase.
Who are your target customers?
Strategic buyers explore potential synergies between their offerings and yours. The more you know about your customer demographics, the better buyers can evaluate the strategic compatibility. If your customers are other businesses, buyers would like to know the functional roles (e.g., training manager, VP of sales and marketing) responsible for purchasing your product or service.
How do you manufacture your product or provide your service?
This question assesses the uniqueness of your production process. Potential buyers want to know if you have any proprietary systems that are difficult for competitors to replicate. They also seek to understand if the creation of your product or service is reliant on any individual.
What sets your product apart from others?
Buyers aim to gauge the strength of your business’s competitive advantage and its ability to protect against future competitors. What measures have you taken to safeguard your position in the market?
Can you describe your back-office setup?
Buyers typically want to understand the ease of integrating your back-office operations into their own. They inquire about your bookkeeping and billing software, payment processes for customers, and supplier payment procedures.
While this list is not exhaustive, it provides a solid foundation for preparing to present your company to potential buyers.
Contact Investment Business Brokers to learn more about the selling process and how to prepare for an exit event.