Is That Buyer for Real? Why Knowing Your Audience Matters When Selling Your Business

So, you’re selling a business. Exciting times, right? The potential for a lucrative deal, a successful exit, it’s enough to get anyone’s heart racing. But before you dive headfirst into negotiations and start picturing that well-deserved vacation, let’s talk about something crucial: knowing who your buyer really is.

We’ve all been there. Someone shows up, flashes a business card, and says they’re interested in acquiring your company. Visions of closing the deal dance in your head. You’re eager to get the ball rolling, to see what kind of offer they’ll bring. But hold on a minute. Are you sure you’re talking to the right person? Are they even legitimate?

The Time-Wasting ScenarioNightmare

Imagine this: You spend weeks, even months, in intense negotiations. You’re sharing sensitive financial data, revealing your company’s inner workings. You’re deep into due diligence, the excitement building with each passing day. Then, boom! You discover the person you’ve been dealing with has absolutely no authority to make a deal. They were just “snooping,” gathering intel for a competitor, or perhaps simply a low-level employee with no real decision-making power.

Sounds like a nightmare? It happens more often than you think, especially with strategic buyers.

Why This Matters More Than You Think

When selling a business, particularly to a strategic buyer (a company in the same industry), you’re not just selling assets; you’re sharing your hard-earned secrets. You’re opening up your books, revealing your strategies, and potentially giving away valuable competitive advantages. If you’re not dealing with a legitimate, authorized buyer, you’re putting your business at serious risk.

Asking the Tough Questions (Without Being Rude)

So, how do you protect yourself? It’s all about asking the right questions, without coming across as overly suspicious. Here’s what you need to know:

  • Who are the principals? Don’t be afraid to ask about the decision-makers within the acquiring company.
  • What’s the decision-making process? Understand how approvals are obtained and who needs to sign off on the deal.
  • Is the person you’re dealing with authorized? Request documentation, such as a company resolution, that proves their authority.
  • What is the structure of the business? Understanding the corporate structure gives you a better idea of who you are dealing with.

Balancing Enthusiasm with Due Diligence

It’s natural to be excited when a potential buyer shows interest. But remember, your primary responsibility is to protect your client’s interests. This means balancing your eagerness to close the deal with a healthy dose of caution.

Tips for Verifying Your Buyer:

  • Do your research: Conduct thorough online research on the potential buyer.
  • Request credentials: Ask for business cards, company websites, and other verifying information.
  • Verify the information: Cross-reference the information provided with public sources.
  • Use professional advisors: John Diaz Group KW Business Brokerage will coordinate with Lawyers and financial advisors to help verify information.
  • Document everything: Keep detailed records of all communications.

Selling a business is a complex process. By taking the time to understand who your buyer is, you can minimize the risk of wasted time, protect your valuable information, and increase your chances of a successful transaction. Don’t let the excitement of a potential deal cloud your judgment. 

At the John Diaz Group – KW Reserve Business Brokerage, we help business owners sell their companies smoothly while maximizing value and maintaining confidentiality.

Selling a business is a complex process, but with the right guidance, it can be seamless and rewarding. At the John Diaz Group – KW Reserve Business Brokerage, we specialize in business sales across South Florida (Palm Beach, Broward, Miami-Dade & Saint Lucie), ensuring you receive the best price while safeguarding confidentiality. 

From valuation to buyer screening and deal structuring, we manage every step of the process. Whether you’re selling a small business or a franchise, we provide expert support to help you close successfully. Contact us at 844-456-4647 or email us at john@kwbusinesssales.com.