Assessing a potential buyer for your business can be an absolute rabbit hole when it comes to wasting time, -your most valuable commodity as a business owner.

We recently asked our community for some tips on best practices for qualifying potential buyers, and below, you’ll see the preferred tactics our BizNexus Community Advisors and M&A professionals referenced as some of their reliable go-to strategies for managing this successfully at scale, -an artform not easily replicated.

Does the Buyer Provide you Information Upfront?

As part of the vetting process of first-time buyers, three administrative items are requested/required. 1) Up to date resume or curriculum vitae. 2) Personal financial statement, 3) a current credit report - secured by a potential buyer. Next, an in-depth conversation about their motivation to become an entrepreneur.

For first-time buyers who have the right attitude & awareness, additional due diligence on them is done to further evaluate their buyer worthiness.

• George Scott @ Business Consulting Solutions, LLC

Show me, upfront, your money. Enough for the deal you intend. Prove, right now, that what you say you can do is true.

• Ted Leverette @ Partner On-Call Network, LLC

Can The Buyer Provide You With Their Previous Experience?

Prior experience in deal-making or related business operations.

• Vipin Singh @ Murphy Business Sales, LLC

For an individual buyer, they need to have prior experience in deal-making.

• Yatin Thakore @ Technology Park

Interview them, assess background experience and get a loan pre-approval.

• April Femrite @ True Real Estate Mankato

Does the Buyer Have a Funding Strategy?

As part of my initial conversation, I usually just ask them what their strategy is to fund the acquisition. If an individual investor can’t tell me then that is a red flag. If they are relying on the seller for too much financing, that’s also a red flag. As soon as they ask for tax returns, I ask them to complete a personal balance sheet. If they are PE or VC and say they have committed funds, they I tell them we will need to see the funds or know who the investors are before too long to see their reaction.

• Joshua Meltzer @ Sunbelt Business Brokers of Boston & Providence

Join The Conversation In Our Community

We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.