Business Buyers Screening: How to Tell If a Buyer is Serious

Best-case scenario, an insincere or unqualified buyer is a time-waster; worst-case scenario, they violate confidentiality agreements. Sellers are at a huge disadvantage during the buyer’s screening because their candidate may ask the right questions, offer the right vision, and still wind up a lost cause. The best armor they have is to understand the red flags, so they’re not spending too much time on an unlikely candidate and instead focusing on more qualified buyers.

4 Signs a Business Buyer is Serious

Ultimately, you’re looking for a person or group of people who are prepared and transparent. Below are some key signs that help distinguish good prospects from tire kickers.

1. Their financial documents are in order

Serious prospective buyers don’t want to waste time. They’ve done their homework and will show up with their pre-approval and other qualifying financial information right off the bat. They want to act quickly, so they’ll already know what they want and what they can afford.

2. They have dealbreakers

Someone who’s stringing you along may not be so upfront about their specific criteria, but a serious buyer will have hard objectives to disqualify incompatible opportunities. Furthermore, when a legitimate buyer reaches out for additional information, they’re not seeking the basics. They want concrete info that they can’t garner from a business listing, so be prepared for them to ask more in-depth questions.

3. Their communication is solid

When screening potential buyers, you can disqualify most with dodgy communication. Unqualified buyers tend to beat around the bush, whereas quality candidates are direct and forthcoming about their interests and specific needs. Now is the time for building trust, and if someone is going long periods without answering calls, giving you ambiguous answers to hard questions, or otherwise being a poor communicator, you should reconsider them as a candidate.

4. They’re willing to sign non-disclosure agreements

Don’t trust a candidate who isn’t willing to sign a confidentiality agreement during the screening process. You’re sharing a lot of sensitive information, and it’s completely normal and even expected for a seller to try to protect themselves. If they’re offended or do not take this stage seriously, then you should probably keep your search going.

Plus: They’re well connected

This isn’t a requirement, but it’s always nice when a potential buyer has people who confirm their credibility. So, look to see if they are already working with vendors, banks, business brokers, and other professional advisors. These relationships support the idea that they are not only interested in purchasing a business but are also ready to embark on the venture.

The last thing you want to do is waste time with the wrong candidates. But, finding buyers alone can be difficult, let alone serious buyers.

One major advantage of working with a business broker or M&A advisor like Sunbelt is that we can help you find and qualify candidates, to save you time during this critical stage of the business sales process. Contact your local Sunbelt Business Brokers office to discuss your business goals, and you’ll be on the way to finding your successor.