Further Screening Buyers

A mutual exchange of information is reasonable and to be expected as the transaction unfolds. Any buyer who refuses to release information to you regarding their qualifications signals they’re either not serious or are unqualified. 

Screen Buyers in Phases To Assess Their Interest

If a buyer isn’t known in the industry or you doubt their financial wherewithal, requiring the buyer to jump through a number of hoops before they receive sensitive information on your business allows you to assess their interest level and financial qualifications. Most buyers understandably get frustrated or offended if you attempt to screen them all at once early in the process. The solution is to use a phased approach, both in screening and in releasing information to the buyer.

How to Screen Companies

When screening lesser known companies or buyers, such as independent sponsors, you can ask for financial statements, references, a buyer profile, a disclosure statement, and a list of past transactions, if applicable. You can also independently research the key people you’re dealing with by Googling them or researching their social media profiles. In addition, you can obtain their IP address from the metadata in emails and documents, which can supplement your search. I’ve used this trick multiple times to uncover buyers who aren’t who they say they are. These are all simple procedures that anyone can implement to minimize risk of putting sensitive information in the wrong hands and help you avoid major headaches later on.

The best weapon in M&A when selling your business is candor.


Here’s a reminder of the sequence of events that lead up to the management meeting:

  • The buyer is pre-screened and signs an NDA.
  • The buyer receives the CIM.
  • You and the buyer conduct a phone meeting.
  • Additional phone calls or meetings are conducted until the buyer makes an offer or decides not to pursue the acquisition.

The maxim, “Honesty is the best policy,” does indeed have merit. Be careful regarding any ad hoc representations or documentation you create. Stick to the facts. If you wish to garnish the facts, avoid doing so in writing. 

Make sure you stay focused on running your business through this period of meetings and negotiations so you continue to have a strong company to sell. Doing so will help you maintain your emotional objectivity.

Keep these tips in mind:

  • A phased release of information is best, especially if you have any looming concerns with regard to confidentiality. 
  • The safest route to take before providing sensitive information is to ensure you’re working with a qualified buyer who is serious about the transaction and financially able to complete it. 
  • Ensure that a confidentiality agreement is signed before any sensitive material is released to safeguard you and your company against any unauthorized use of information or intellectual rights to your business as a whole. 

Throughout this process, you’ll deal with a wide variety of buyers. Some buyers take a zero-sum game approach and will attempt to win at all costs, doing little to hide their aggressive negotiating style. Others may be more subtle regarding their approach. They may hide their true intentions and attempt to use your honesty against you. A firm but respectful position is best in these cases. Regardless, employ a professional if you lack experience, and remember – the best weapon in M&A when selling your business is candor.