Selling a business is all about finding a buyer, isn't it? One of the questions I hear most often is, “Where do you find the buyers?” My answer: “They find me.”
What? It's that easy? Yes, it's that easy. Once you put information about an attractive business for sale on the worldwide web, buyers start coming in. But that's a loooong way from actually closing a deal.
On average, I speak with about 45 buyers for every business I sell. Some particularly attractive businesses generate as many as 200 inquiries, especially in sought-after industries near a large city. But an inquiry is a long way from a completed transaction.
Finding interested buyers is only the beginning. The real work is getting someone comfortable enough to actually buy the business.
Think about what we're asking a buyer to do. They're about to invest a substantial amount of money, often take on a significant loan, and assume responsibility for running a business they don't know nearly as well as the seller does. Even in the rare case of a largely absentee-owned business, the buyer still takes on the risk of making it work.
And then there's the valuation. Business valuation isn't an exact science. We have financials, comparable transactions and valuation methods that help establish a reasonable range. But no two businesses are identical, and ultimately, the purchase price has to be justified.
That's where much of our work as Business Brokers happens. We need to understand what makes this particular business attractive, explain the financials, address weaknesses and risks, and help buyers work through their questions and concerns. We're not simply presenting information. We're building the case for why this acquisition makes sense at the proposed price.
And we're dealing with people, not just spreadsheets. A business owner may have spent years thinking about selling, weighing the financial and emotional consequences of letting go. A buyer goes through a similar journey, only in the opposite direction. They're considering taking on the responsibility the seller is ready to give up.
I sometimes think about the buyer at their next Fourth of July barbecue, telling their cousins about the business they just bought. Of course, they want everyone to congratulate them and tell them what a great decision they made. But more importantly, they want to believe it themselves. They want to be proud of their purchase and sleep well at night knowing they can handle the financial and operational responsibilities they've taken on.
Getting a buyer to that point takes more than marketing. It requires patience, transparency, negotiation, an understanding of the buyer's perspective, and the ability to justify the value of the business.
That's what selling a business actually means. And that's where a good Business Broker earns their commission.
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