8 Questions You'll Be Asked When Selling Your Business
April 16, 2014

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One of the greatest opportunities you will face when selling your business will be the barrage of questions during the various management presentations you'll be doing for potential acquirers. Be prepared for some "interrogation" on many facets of your operations.  Of course every meeting will be different, and here are 8 of the most common questions you can expect when you're in the hot seat:
 
1. Why do you want to sell your business?

It's a "slippery slope" question because if your business truly does have a bright future and you want the buyer to believe that's the case-the obvious question is:  "Why do you want to sell it, and why do you want to sell it now?"

2. What is your cost per new customer acquired?

The potential acquirer wants to find out if you have a repeatable, duplicable, predictable, economical and scalable formula for finding new customers and clients.

3. What is your market penetration rate?

The acquirer, with an eye to future growth, is trying to understand how big the potential market is for your product or service and what part of the field remains "untouched" and can potentially be harvested.

4. Who are the critical members of your team?

The acquirer wants to understand the breadth and depth of your team and determine specifically which members need to be motivated and retained post-purchase.  What is each member's knowledge and skills, experience, behaviour style, workplace motivators and personal development plans?

5. Who buys what you sell?

Strategic buyers will be searching for any possible synergies between what you sell and what they sell. The more you know about your customer demographics, the better the buyer will be able to assess the strategic fit. If your customers are other businesses, a buyer will want to know what functional role (e.g., training manager, VP of sales and marketing) buys your product or service. At what levels does your company's personnel interact with your best "clients" - your top 20%?

6. How do you make what you sell?

This question is asked in an effort to size up the uniqueness of your formula for creating your product or service. Potential buyers want to know if you have any proprietary systems or processes that would be hard for a competitor to replicate. For various reasons, they will also want to understand if the creation of your product or service is dependent on any one person.

7. What makes your product truly unique?

A buyer is trying to understand how big the "moat" is around your business and what kind of protection it offers from competitors who may decide to compete with you in the future. What have you done to safeguard yourself against the competition? What is your truly "Unique Selling Proposition".

8. Can you describe your back-office setup?

Most buyers will try to understand how easily they can integrate your back office into their operation. They'll want to know what bookkeeping and billing software you use, how customers pay, and how you pay suppliers.


Of course this is not an exhaustive list, a great "Due Diligence" list will have more than a 100 questions!  Having answers to these 8 is a perfect start when you're preparing to represent your company to your potential buyers.

Are you curious about how "Sellable" your company is and what you would need to tweak it to sell when you're ready? Then it's time to get your "Sellability Score" via the questionnaire on my websiteIt takes about thirteen minutes and your responses are kept confidential. 

If your business needs help becoming more valuable or you just want to make 2014 Your Best Year Ever, give me a call. I am here to help!

Be Great,

Jim Flemming
Certified Business Coach and Sellability Advisor
FocalPoint Business Coaching Excellence
1-506-849-6319 or toll free: 1-877-223-0622