Common Questions a Buyer May Have About Your Business

Selling your business comes with lots of work. You’re going to be providing documentation to potential sellers, answering questions, negotiating contracts and more. To get ahead of the process, we’ve come up with a list of some of the most common questions that potential buyers will have for you before they buy your business.

Check them out below to prepare your answers in advance and ensure potential buyers have all the information they need to proceed with the sale.

12 Questions a Buyer May Ask About Your Business

Here are 12 questions you may have to answer before working with a potential buyer: 

1. Why Are You Selling?

This may seem like quite a personal question, but often buyers want to know your reasons for selling. They will want to assess whether you’re being wholly truthful about the status of the business.

You should always be honest when someone asks this question. If you think you have taken the business as far as you can, or you’re simply moving on, a potential buyer will likely see the opportunity to buy.

If you are selling because the business is declining and you’re looking to recoup some costs, then you need to be upfront about this. There are buyers who make a living from buying declining businesses, so don’t worry about not attracting one!

2. How Long Have You Owned The Business?

Business buyers often ask these questions to gauge the longevity of the business. It can indicate the likelihood of future success and put their mind at ease. They may also ask you questions about the history of ownership, including if you started the business or bought it from someone else.

3. How Many Hours Per Week Do You Spend on the Business?

Some potential buyers are looking to change from working for someone else and will want to know how many hours they need to commit per week to the company. Offering them timesheets and a scale of the hours you spend working on the business can help them to get a better understanding of the role they’re about to take on.

4. What is the Business’s Financial Health?

Asking for your financial records is a huge part of the due diligence done before a potential sale. However, before going into the more formal process, a potential buyer may ask you this kind of question.

We always recommend being truthful at this stage. If you embellish, they will likely find out the truth somewhere down the line and the sale could fall through. 

Remember, there are ways to bolster your finances before selling, and you can get advice on doing so from experts. This can put your company in the best position possible before it goes on the market. This may include restructuring or changing suppliers.

If you’ve had issues with finances in the past, it is also a good idea to let the buyer know, even if you’re no longer struggling. This can give them an idea of the risks they’re taking on and may help them to prepare for the same issues you had.

5. How Does The Busines Generate Revenue?

A potential buyer wants to know that the business is actually going to make them some money, so help them out by making them aware of all revenue streams.

In addition, this could be a good time to speak with them about revenue streams you have considered in the past that have some potential for your business. This helps them to see a future in the business and its additional lucrative opportunities, potentially increasing the likelihood of a sale. 

6. How Has The Business Been Valued?

There is no one way that a business is valued, but a buyer may want to know what was taken into consideration by you or your representative to come to the asking price. Don’t be offended by this question. They’re not subtly trying to tell you it's not worth what you’re asking! They may just want some clarity on where the value came from.

7. Will I Retain Existing Employees?

Some business sales lead to a complete overhaul of the workforce; some don’t. A potential buyer may want to know which is the case and whether they can rely on having a full team when they take over.

A full workforce can give potential buyers peace of mind too. If they know they’re going into a leadership role where the employees already know what they’re doing, they will have people to turn to for guidance.

This is a common question, and it is something you will need to consider before putting your business on the market. Consider your employees and whether they will want to stay on under new leadership or not.

8. What Liabilities Are Currently Attached to the Business?

Many buyers want to ensure they’re not taking on more risk than the business is worth, which is why they may ask about liabilities. This may include debt, mortgages on business premises, or even equipment payments.

They may want to negotiate with you about the price of the business or the allocation of debt if they consider financial liability to be a significant issue. It’s important to be open about these liabilities before the potential buyer does any due diligence too.

9. What Assets Come With The Business?

While a potential buyer will ask about liabilities and risks, they’re likely to ask about good things that come with the business too. Bear in mind that this could be both tangible assets, like equipment, delivery trucks, and premises, as well as goodwill, social media traffic, and more.

Compiling this information prior to engaging with the buyer can increase the likelihood of a positive outcome as assets that come with the sale may be attractive to the buyer. 

10. What Permits/Licenses Will Need Renewing?

A buyer will ask about permits and licenses for one of two reasons. 1. To plan ahead so they know their renewal dates and have cash and time set aside, or 2. So that they can actually acquire the permits before they end up in legal trouble! Make sure to give them a full account of everything they need before it comes to the negotiation table.

11. How Long Will The Handover Be?

As the seller, you have obligations to set out an adequate handover process. It will take some time to plan and get the process down, but the length of time can be agreed upon between the buyer and the seller, so it suits all parties.

A buyer may have a set amount of time they want the handover completed, and you can negotiate with them to ensure everything is sorted before the process begins.

12. Do You Have Any Advice For Running The Business?

Lastly, a gesture of goodwill on your part could be to offer them some advice anyway, but a potential buyer may ask you outright if you have any tips. They may be new to the industry or have never run a business before.

You can offer them advice, tips, and recommendations for what works and what doesn’t. You may even consider staying on for a period to help them out in a consulting capacity during the transition process. This can ensure that you leave your legacy in good hands.

Final Thoughts

Buying a business is a big transition for many buyers. As a seller, it can be helpful if you are ready to answer common questions and give guidance where it is appropriate. These are just a few of the many questions you may be asked!

Are you looking to sell your business? The Eden Exchange platform is a space for business sellers with thousands of active buyers already. We’ve helped professionals like you sell their businesses, so what are you waiting for?

Get in touch now to find out more about how Eden Exchange can facilitate the sale of your business!