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How do I deal with potential buyers when Selling a Business?

Home » Entrepreneurship » Selling a Business » How do I deal with potential buyers when Selling a Business?

After you�ve set a price for your business, you are going to be spending a lot of time with possible buyers, discussing not only the business but also terms of the sale. Before this happens, you need to settle on your priorities in regard to what you hope to achieve by selling the business.
Here are some of the terms that you should be considering as absolute requirements for buyers:

What, specifically, are you selling? Are there any assets you wish to keep?
How much of the purchase price will need to be offered at closing?
To what extent do you wish to remain involved in the company, after the sale?
How will tax considerations play into your profit?

Once a prospective buyer has met your terms, the price discussions can begin. As far as negotiating is concerned, some business advisors recommend that the broker do most or all of the negotiating, because of their ability to remain objective. However, many buyers will respond better to direct contact with the current business owner. In either case, some agreement should be reached with the buyer before your lawyer or tax advisor gets involved, since they deal with the tiny details and are being paid by the hour.
Once you�ve found a buyer and agreed on terms and price, you are ready to begin closing the deal. Here are the major steps involved in the actual sale of the business:

Letter of intent: the buyer writes a nonbinding letter outlining the terms and price you've informally agreed to and pledges confidentiality so that they will be allowed to investigate the company further.
Due diligence: the interested parties have a limited time period in which to investigate each other thoroughly and decide whether they want to proceed with the deal.
Purchase agreement: the lawyers of the interested parties will decide the details of the purchase and draw up contracts.
State law requirements: state laws commonly require notification about the pending sale for various reasons. As a seller, it is your (and your lawyer�s) job to be aware of such requirements.
Closing the deal: once all of the details have been agreed upon, the parties sign the contracts, exchange money and documents, and complete the transaction.

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