There are many types of business purchasers – some are laid back, others are analytical or the “hard-core” investor, and there are also those who are simply passion-driven to own and run their own business. Regardless of the personality of a particular buyer, there is one thing that these folks will likely have in common – this will be his or her first business purchase.
According to the International Business Brokers Association (IBBA), the average business purchaser looks for businesses for up to 18 months, often failing to complete on any business transaction. There are several factors leading up to such a setback, but a couple of prime reasons for a buyer’s frustration is their unrealistic expectations or unwillingness to hire the right professionals to assist them, such as their accountant, business broker or attorney.
The task at hand can often feel overwhelming for the unprepared buyer. Though there are thousands of businesses on the market at any given time, only a few will may meet their criteria: budget, required discretionary earnings (also known as “owner benefit), desired working hours, location, or staff requirements. It can also be frustrating for those who don’t know where to begin the search or questions to first ask themselves – Where can businesses for sale be located? What aspects of a business need to be evaluated? What type of business do I even want?
As time passes and business opportunities come and go, the mission often becomes time-driven for the buyer. Maybe there are personal reasons: she is looking to quit her job and run a shop, or wants to relocate by summer’s end to get her family into the new school district. If it’s strictly business-motivated, perhaps the time-crunch is due to assets recently liquefied that need to be reinvested as part of a particular strategy, or an existing company needs the support of an acquired business. Some purchasers are just ready for a change.
Several times a month, my office receives calls from people who have spent months looking for a business before reaching out for help. The clock has been ticking and they explain that they need to buy a business as soon as possible. One thing a broker cannot do for a buyer is turn back the clock.
What a professional business intermediary can offer a buyer is knowledge, time, and experience. They can assist buyers in determining which industries to target, enhance the business search, prepare offers and aid in negotiations, investigate financing options, and guide the transaction toward a successful close.
If a buyer is having difficulty in her pursuit, she needs to make the time to sit with a professional she trusts and explain her needs, budget and timeline. Honesty and trust are the first two components that are needed to get the search back on track and make the following weeks productive and as efficient as possible.
The business buyer doesn’t have to go it alone – with the right team, the search and acquisition periods will feel more fruitful and productive, and the end result will be more positive. Preparation is key for any aspect in life — a person’s business and family needs most certainly included. Learn what it takes to be successful in your pursuit – and share it!
A Call for Submissions: “The Anatomy of a Prepared Business Purchaser”, as Told By a Successful Buyer