Seller Behavior When Showing a Business to Buyers

Most business sellers are anxious about what to say when a potential buyer has been presented to them by their business broker. Is the broker supposed to do all the talking? How should the seller behave?

A common misconception is that the broker would have already done all the selling and would have provided all relevant information to the buyers before the showing. Sellers assume that there is no need to put extra effort in preparing for the buyer interview. This cannot be further from the truth.

While business brokers do provide extensive information about businesses to potential buyers, there is simply so much more information that can only be conveyed by sellers themselves. Below are a few reasons why there needs to be a face-to-face interview between buyers and sellers:

Buyers need to hear the business story directly from the seller. Trust needs to be established, and human interaction is the key to establishing it. Doubtful buyers tend to dramatically discount any information provided to them. No buyer will ever make an offer to a seller they don't trust. How should a seller prepare for this? Simply be yourself. Try to remember how you started the business, the obstacles you overcame, and how you became successful. There is no need to make up or exaggerate stories. The more real the stories, the more genuine you will appear to buyers.

Buyers need to ensure that they can learn the business. Most sellers tend to boast about their skills and smarts to buyers. While it is certainly good to project self-confidence and success, you are not selling your skills and aptitudes -- you are selling your business. If buyers feel that the business is successful only because of your superior character and ingenuity, they will feel that "you are the business" and the business on its own will appear to have diminished value. So, how to deal with this issue? 
Remember that buyers are not interested in you -- they are interested in your business. Stop talking about how smart you are and start talking about how you made your business independent of you. Talk about the processes you put in place to manage the business; about how your employees can perform their duties with very little assistance from you; and about how any buyer with reasonable business experience can learn about the business in reasonable time and become successful in it.  If your business is, in fact, truly dependant on you and nobody else can learn it in a reasonable time, then your first step should be to restructure it before you put it in the market. Another solution would be to chose buyers with relevant experience and to commit to a reasonable time period to train them. 

Buyers need to ensure that they can get along very well with the seller for a smooth transitional period. There is nothing better than a face-to-face interview with people to assess how well they will be capable of getting along with one another. Again, you simply need to be yourself. If you feel you cannot work with the buyer, then they will likely be unable to work with you as well. This will haunt you in the end, and the transaction will probably not close anyway. The best solution is to simply search for other potential buyers. This time you are the interviewer, not the interviewee. 

Buyers need to ensure that they can become successful in the business. Not everybody can succeed in your business. As a seller, you know your business well, and you know what it takes to become good at it. If you feel that the buyer's personality or skillset doesn't fit with your business, you should say it up front. The sale process is long and tedious. A buyer that is unfit for the business will recognize it sooner or later and walk away from the deal. Having the courage to express your feelings upfront will save you time, effort and money. Furthermore, buyers appreciate honesty -- and if you made a mistake in assessing their capabilities to manage your business, they will fight to prove you wrong and might even become more interested in the business. Finally, being upfront at the outset is a good way to test a buyer's motivation and spark interest in your business.

In my experience selling businesses in the last few years, I have come to the conclusion that sellers who are genuine and say the good, the bad, and the ugly about their businesses upfront, end up selling for higher prices in shorter time periods.