All Buyers Are Not The Same: 4 Differences + 2 Principles
When you prepare to sell a business your focus is typically on you – the net proceeds from your business sale, tax implications, the transaction process, and the next stage of your life. That’s natural and understandable at such an important time.
Potential buyers are attuned to other concerns. All buyers are interested in reducing their risk and increasing the return on their investment, whether large or small. But all buyers are not the same.
Here are some typical differences:
- Some buyers know your marketplace well, while others are attracted to it but know little about the specifics of operation. As a result, they ask a lot of questions that may seem very basic to you.
- Some buyers are very focused on your management team remaining in place, including you as CEO, while others are likely to replace or consolidate management at some level and not retain you in any meaningful way.
- Some buyers have significant excess cash to accelerate the growth of your business, others won’t have this flexibility.
- Some buyers plan to keep your company’s identity, others will integrate it into their brand as quickly as feasible.
And so on.
How do you prepare for this diversity of buyers? We suggest that you always keep these two principles in mind:
- You won’t be attractive to all buyers – sellers sometimes personalize this when a buyer says they’re not interested, and often the “rejection” is simply a lack of a match with the buyer’s acquisition criteria.
- Make your business model as clear as possible – the easier it is for a potential buyer to understand how your business works, how you generate revenue and how you manage your operations/expenses, the more confidence they can have in their potential ROI and risk mitigation.
Very simply: Look at it from your customer’s perspective.