Could You Spot a Qualified Buyer?

It's essential to weed out the unqualified buyers when trying to sell your business. These steps will help you sort through the offers and focus on only the most capable buyers.

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The first decision in the process of dealing with potential buyers for your small business involves screening inquiries from those who respond to your business-for-sale ads. Be prepared: Most sale advisors will tell you that nine out of ten people who respond to sale ads will never make a purchase. They'll also tell you that many of those who do respond simply don't have the qualifications or capabilities to buy the business being offered.

Some are wannabe shoppers who want to buy a business but are in no way ready to do so because they either lack the financial resources or business acumen to complete a purchase.
Some are tire-kickers who are simply curious about what kinds of opportunities are available.
Some are competitors masquerading as buyers in order to gather intelligence.
Some are what those in the industry call "sharks" who are searching for sellers who look overly anxious to sell and who may be willing to accept rock-bottom prices.

Your job, or your broker's job if you're using one, is to separate the strong bets from all the others.

Step 1: Be clear about the necessary attributes of your likely buyer.

Screening ad responses gets easy only if you know your knockout factors. So make a list of what qualifications and capabilities are essential:

What business experience, professional certifications, etc., are absolutely necessary?
How much cash do you think you'll require on closing day?
If you'll be offering a seller-financed loan, what type and level of solid collateral will you require as security?
What timeframe must the buyer be prepared to act within?

Step 2: Screen and sort ad respondents by their ability and likelihood to buy your business.

Your ads will provide information to help unqualified buyers opt themselves out, plus they'll require respondents to provide information that allows you to pre-screen their capabilities before pursuing their interest further. Based on the information each prospective buyer submits, complete the following pre-qualification form:

Yes	No	Maybe	Is the buyer specifically interested in your business or market area?
Yes	No	Maybe	Does the buyer possess the necessary education, licenses, certifications or experience?
Yes	No	Maybe	Is the buyer interested in making a purchase within your timeframe?
Yes	No	Maybe	Is the buyer seeking a business of your size and in your price range?
Yes	No	Maybe	Does the buyer have the ability to meet your closing day payment expectations?
Yes	No	Maybe	Is the buyer qualified for an SBA or other third-party loan (or to meet your seller-financed loan qualifications)?

If a prospective buyer earns a line-up of "yes" answers, you know you have a solid lead.

A string of "no" answers lands an inquiry in the "not now/maybe never" pile.

Those who get "maybe" answers need to share additional information about their qualifications before you can screen them in or out as prospective buyers.

Step 3: Verify the information the buyer has provided.

If you're working with a broker, he or she will handle the task of obtaining information that verifies the buyer's financial capability, business licenses or certifications, or other necessary qualifications.

If you're working without a broker, you'll need to verify facts on your own, probably with help from your accountant and attorney. This involves requesting copies of bank statements, financial statements, professional licenses and certificates, and other documentation.

Qualified, serious buyers will be prepared for such requests, though often they'll feel comfortable releasing information only after signing mutual non-disclosure or confidentiality agreements. These agreements are part of a trust-building quid pro quo exchange during which you release facts and financial information about your business in exchange for similar information from the buyer.

Mike Handelsman is group general manager for BizBuySell.com and BizQuest.com, the Internet's largest and most heavily trafficked business-for-sale marketplaces. @BizBuySell