It's not very difficult to find a number of interested buyers once you put your business up for sale. However, it is essential to understand that not all of them are actually going to approach you with the intentions of buying your business. That being said, there are various things that can come in handy if you want to figure out whether any interested buyer is genuine or not. Dealing with buyers and negotiating the business terms is a tasking process. Thus, it becomes important to take necessary steps to avoid having your time wasted.
Find out their reason for buying your business:
You need to be clear about the intentions of a buyer before moving forward with the business deal. Ask the buyer why he wants to buy your business and what makes him think that this industry is going to be suitable for him. You can figure out the sincerity of the buyers by their knowledge of the industry they're interested in buying an existing business in.
Do not forget the confidentiality agreement:
Refusing to sign a confidentiality agreement is yet another thing that should warn you that the buyer you're dealing with is never going to finalize the deal. This agreement needs to be signed before revealing any business details so that any potential buyer can't go around spilling secrets about your company. Any genuine buyer would be ready to sign the confidentiality agreement in order to provide the seller with the required sense of assurance.
Know beforehand what any buyer would do to your business:
You just can't hand over your business to any individual who does not have a clear vision about the business and its future once you've sold it. For this, you need to pay attention to the plans they have for your business in order to have an idea of their sincerity.
Pay attention to the negotiations:
This is yet another part of the business deal that needs to be focused on if you don’t want to waste your time dealing with insincere or even fake buyers. It might come as a surprise to you, but there are a number of individuals who approach sellers on a regular basis but don't end up buying any business. Among such people, many are those who tend to offer you instant payments and set unrealistic expectations. However, the catch is that the price offered by such buyers is way less than the reasonable value for your company.
Include the provision for the termination fee:
Do you know that the letter of intent can have a clause with a termination fee? This termination fee will need to be paid by the buyer in case the business deal is terminated from his side.This provides the seller with some incentive for the time he has wasted with a buyer that backed out of buying the business. However, this doesn't mean that anyone who refuses to buy your business will have to pay you this termination fee. This fee is only supposed to be paid when a considerable amount of time has been invested in the deal. This saves the seller from frauds in the market because of this fees. If you have a business for sale in Michigan, do not forget to draft your letter of intent thoughtfully. You should remember the laws pertaining to Michigan while drafting your LOI, otherwise it may be voided due to state law.