By Monica Dahl, SBA Relationship Manager at Core Bank.
The Core Bank team recently had the privilege of sponsoring the “Plan for Succession While Building Value: a workshop for business owners” conference hosted by the Kansas Small Business Development Center. This was a great event that was well attended by business owners, buyers and industry experts. Core Bank was asked to host two round table discussions on a topic of our choice. As a team we put our experience together to come up with the topic of “5 Signs of a Qualified Buyer”.
We asked ourselves what are the main causes a business acquisition goes bad on the buyers end. This is where our 5 signs were born. The discussion was rich with our experts and owners engaged in the conversations. This was such a hot topic we wanted to go on and share these 5 Signs with you so when you, or someone you know, decides to sell their business they may be equipped with a few topics to focus on.
MOTIVATION
Why do they want to buy your business? How did they find your business? What motivates them to continue previous success as well as make improvements?
EXPERIENCE
What previous experience does this person/s have to run a business and manage people? Do they have any direct industry experience? If not, what other qualities do they possess to offset this?
PERSONALITY OF THE BUYER
Will they fit in with the existing culture/ how will employees accept the new owners? Are they going to be an absentee owner? Do any changes they plan to make to the business make sense?
PERSONAL CREDIT
Do they have strong personal credit to purchase your business? Do they have the personal means to tap into additional cash if needed?
EQUITY
Do they have adequate cash to put down towards the acquisition of your business? In broad numbers how much at a minimum should they bring? Should the seller have to carry any amount back in a note? What risks does this impose on you as the seller?
These, by all means, are not all encompassing but are a great start in deciding who may be the right fit for leading your legacy into the next generation. For further discussion or questions on buying or selling your business feel free to reach out to us at Core!