A phased screening process means that we prescreen the buyer in phases or stages because most buyers will refuse to be thoroughly screened at the initial stages ― particularly before they have seen information on the business and decided they would like to take a deeper look at the business.
If you ask a buyer for a financial statement, credit report, bank statements, tax returns and other documents early in the process, most will refuse. The solution is to ask the buyer for these and other qualifying information in stages as the buyer progresses through the steps in buying your business.
If you are married, did you show up to the first date with your spouse with a 20-page questionnaire along with a detailed checklist of documents, psychological assessments and other requirements for your potential mate to complete? While some of you may have done this, we doubt the majority of you have. In reality, the process of dating, engagement and getting married is analogous to selling or buying a business. It starts with a mutual exchange of information and gradually over time more sensitive information is released.
“Ask the buyer this ONE question as early in the process as possible: “How much liquid cash do you currently have to invest in a business?”
When selling a business, the process looks like this:
The key to the process is prioritization and balance. Questions need to be prioritized. Focus on the questions that really matter early in the process. Through our years of experimentation and experience, we have developed a balance that works for us.
“Screening buyers in phases or stages will help ensure you deal only with qualified, serious buyers.”
Focusing on the questions that matter early in the process allows us to create a balance between screening the buyers and receiving maximum exposure for your business.
Yes. We suggest creating a condensed and a detailed version of your selling memorandum or ‘Business Summary.’ The condensed version can be initially shared and if buyers would like to see the detailed version, then ask the buyer to complete the ‘Buyer Package.’ Once you’ve approved the ‘Buyer Package,’ you may release the detailed version.
― Jacob Orosz, Morgan & Westfield