Selling your company: What you should look out for

When it comes to selling your business you should be prepared for what may feel like an overly intrusive process. Potential acquirers will want to probe your business top to bottom, understanding every inch of what they would be purchasing. You should also be prepared to answer a seemingly endless list of questions which although may seem tiresome are imperative to making a successful sale.

Generally, if you are dealing with a professional acquirer they will already have a list of ‘objective’ questions about your business. The following are some of the most common that you should be able to readily answer or provide relevant documentation on. It is also important to remember that depending on your industry these questions can vary but these are some of the most general.

  • Are any of your products, ideas etc. protected by your own trademark or patent?
  • How secure is your revenue?
  • Who are your major customers and who looks after them?
  • Are all of your contracts complete and up to date; this includes not only customers but suppliers and employees.
  • What are the loan conditions on your current credit or lease agreements?
  • Do you have/require a license to operate your business or software and is this all in place if so?
  • Do any or your key business assets need replacing, is your IT up to date and secure?
  • Is your compliance up to date?
  • Does your business or you have any current legal action pending and if so how will this affect the state of your business?

It is also likely that they will want to get a subjective overview of your business and generally try to understand what amount of business success is personally attributed to yourself. In order to do so, the buyer isn’t likely to ask questions but rather be slightly more deceptive in discovering this information. Experienced acquirers will be well versed in the tricks of finding out about you and your business. The following is the top four most commonly played out ‘tricks’ from potential buyers:

As one of the more objective questions, a potential buyer may ask you what your vision of the company’s future is. Naturally, this is a question that you should be fully prepared to answer, but it is a vision that is only known by yourself? One of the tricks potential buyers might use is to ask your staff if they are also aware of the future plans of the business. This may vary from managers to general staff, but if they are not in the loop with your plans it may appear that this vision is only in your head and will not be realised anytime soon.

Another trick that is often used is to try to change the time of a meeting you have scheduled at the last minute. This may seem unusual but depending on how easy or difficult it is for you to accommodate this change they will be given a clearer idea of the role you play in your business. If you are unable to rearrange they will undoubtedly want to know what part of the business is so integral that you are required to personally be there.

One of the best ways of getting to know a business is to talk to the customers and potential buyers will not hesitate in doing so. If they ask you to put them in contact with some of your customers naturally they will be expecting you to choose those with the most favourable opinion towards you. However, what they want to know is why they buy from you, will they be loyal, is it because of your service and products or more due to a personal relationship with you? If they discover it is the latter then they are less likely to be impressed.

One of the final ways they may go about understanding your business is through ‘mystery shopping’. This can even be done even before they meet you. They can pose as a customer themselves, whether this consists of going in store or shopping online to get a feel of the average consumer experience. They are testing your systems so you should ensure that your business consistently offers a good and reliable service to all customers. You should also make sure that you are not the one who constantly wins new customers, as if this is seen as a regular occurrence a potential buyer may feel that business is only growing because of you.

By keeping in mind both the objective and subjective ways in which potential buyers will test your business you should be fully prepared to sell in no time at all.