Having qualified buyers to purchase your business is vital to getting to closing. A buyer who is not qualified will only destroy a deal somewhere in the process.  A buyer not qualified has no ability to follow through even after an offer has been accepted.  This is the single greatest “deal killer” among business owners attempting to sell a business on their own.

Just because a buyer wants to buy a business does not mean that they can buy a business. There are two types of buyers – the qualified buyers and the dream seekers. Unfortunately, with owners selling on their own - the dream seekers do not exit the closet until it’s too late. Qualified buyers are so important.

A buyer should be qualified in a certain way allowing for the real possibility of business financing either through the owner his or herself or by third party lending. A buyer with 100% cash is rare. A buyer wanting 100% financing is dreaming as there is no such thing as 100% financing on a business – anyone who tells you that there is 100% financing is a liar!

There are five factors that determine a buyer’s qualification…

1. Relevant Experience

2. Liquid Capital

3. Source of Liquid Capital

4. Credit Standing

5. Motivation

The variables regarding these qualification standards are endless depending on the type of business and the type of buyer. Business owners selling their business on their own underestimate the importance of buyer qualification and are frequently left holding an empty transaction where not only did the sale not take place but the confidentiality was not protected – and the business is now suffering.

Think about it from your own perspective. If you were going to hold a note or mortgage on the business would you do it for anyone or would you want to feel confident that this person would be able to succeed and make payments on time? Third party lending sources feel the same way so qualification is another key component in a successful transaction.

FAILURE TO QUALIFY BUYERS WILL ALSO RUIN YOUR BUSINESS