The number one mistake sellers make when they find a buyer - Most sellers get too excited and lose their focus when they find a buyer. More than 50% of deals don’t make it to the closing table. Focus on continuing to run your business and obtaining additional backup offers.
Many sellers also take their business off the market – A huge mistake! What do you think this does to the buyer? If you want to keep your negotiating position then keep your business on the market, continue to show it, and accept backup offers. This will keep the buyer on their toes and prevent them from playing games.
Tips for negotiating an offer: We have provided you with a simple offer to purchase form. Keep this phase simple and discuss the basics of the deal with the buyer.
Assure the buyer that they will get plenty of time to conduct their research and due diligence after they make the offer. Assure them that they are still not committed 100% until they finish their due diligence period.
What about an earnest money deposit? We always recommend getting an earnest money deposit. This shows good faith and lets you know that the buyer is serious and also psychologically commits the buyer to a greater degree. You are also exposing a lot of information to the buyer regarding your business and obtaining an earnest money deposit is a reasonable thing to do.
A typical earnest money deposit is about 5% of the purchase price of the business, sometimes with a $5,000 minimum. You can, however, negotiate for any deposit you like.
An offer with a higher earnest money deposit carries more weight and many buyers know this and are willing to put down a larger deposit.
The earnest money deposit is typically held by a third party, such as an escrow company or attorney. Contact us for more information.
What about further pre-qualifying the buyers? We have provided you with three other buyer pre-qualification forms. There is no magic formula for when these should be introduced. At the least, a buyer should complete these either with the offer to purchase or they should agree to provide these within x days (typically three days) of you accepting their offer to purchase.
You can ask that the buyer complete these forms at any time you wish. We probably recommend asking that they complete these on their second visit. We also recommend introducing these anytime they request any additional in-depth information or if they want to take information home with them.
Use your common sense and call us if you have specific questions regarding this.
Need help preparing an offer to purchase or dealing with your buyer? Call us today at 888-693-7834 x-101 for assistance. We can assist you in preparing your offer and guiding you through due diligence, all for one low fee at closing. Our rates are generally 1% of the purchase price and we can often structure our fee so it is paid only in the event of a successful sale.
With decades of experience in selling businesses, we can often bring you exponentially more to the table than the fees we charge. Mistakes in the last few stages can be costly and it pays to have an expert by your side every step of the way, all for one low contingent fee.