We’re all familiar with the story about Dr. Jekyll and Mr. Hyde; the person with two completely different personalities. Just as there are different types of buyers with different motivations, there are also buyers with different types of personalities. If you’re planning on buying a business or if you own a business that you want to sell, here are some Dr. Jekyll “traits” that would discourage a seller revealing too much information about their business.
1. Job Seeker
Try to establish this one early on as they are a complete time waster. Asking for a financial statement generally takes care of them. They have no money and no ambition. They don't like their current job so if they find the perfect business with zero down payment, they will be made. There are quite a few job seekers out there so flush these out early.
2. Investor Using Other People's Money
The investor is the person using other people's money and presents themselves as a cash buyer or leader of an investment syndicate authorized to buy a viable business for sale. Once again they can be a time waster so isolate them quickly. The best way to do that is by either requesting a financial statement or request a meeting of all parties that are investing in the business. If the investor lives interstate or overseas you have your answer – would you lend money to a friend or family member to buy a business you will rarely see?
3. Savior
This person generally has a couple of traits. Often they love to talk and have fairly strong opinions; which can give them credibility, but they present themselves as the person which is going to buy the business to turn it around and keep the jobs of all the employees. The quickest way to isolate this one is to ask for a financial statement as chances are they won't have any money.
4. All Cash
The all cash buyer is tricky because you so want to believe they are genuine and that your business is the perfect match for them. They know this, hence the reason they claim to be a cash buyer. However, all they do is waste your time because the cash doesn't exist. If they had that much cash, they would use that money to buy a more expensive business that produces a greater cash flow.
One of the all cash buyer's tricky behaviors is to convince you that they are genuine and then use the lure of being a cash buyer to reduce your price. It is very easy to flush this buyer out—simply ask for a verification of funds and make sure the proof is an original document—not a photocopy. It is perfectly fine that they redact the account number or other sensitive information.
5. Obstinate
This one is really easy to identify: lots of talk, lots of promises and seemingly the perfect buyer (similar to the all cash buyer). But the obstinate buyer refuses to sign the confidentiality agreement. The solution to this one is really simple. Move on and don't waste any more time with them. If someone refuses to sign a confidentiality agreement, imagine how difficult they will be when you are getting into detailed negotiations.
If you’d like more information on selling your business, visit my website http://www.Andrew-Rogerson.com and buy my book - Successfully Sell Your Business: Expert Advice from a Business Broker. This 144 page book takes you through the process from start to finish on the steps to selling a business. There are also many things you can spend time on improving your business to maximize your selling price. These ideas should all be in your business plan. If you do not have a business plan, now’s the time to create one. If you would like a free template, visit my website www.Andrew-Rogerson.com/sample-documents and download option 8.