I’ve had a lot of meetings with people selling their businesses. I’m still learning the process, but I think I’ve started to figure out what the green flags are, and of course – the red flags. So, let’s take a brief look at what I’ve experienced so far.
Red flags: Only wants the full amount of the business paid upfront. Ok, so I buy a hamburger 100% up front, because it’s low risk. Wanting 100% cash in hand immediately is a sign that they just want to take my money and run. I don’t want to inherit a steaming pile of … Uses a broker as a defence shield to take all the questions and provide all the vague answers.
Green flags: Sees vendor financing as a means to demonstrate there is value in the business. Willing to talk about a handover period and on-going support. Cares for the future of the employees. Knows their numbers (even just ball-parking it).
So, what/how do I do things?
- Quick meet to see if there’s value in talking more
- Get more info
- Do my math and see if I can afford it and scale it
- Discussing purchase/investment options
- Due diligence
- Final decision if I’ll buy
- Discuss the practicalities of handover and managing Day 1, Week 1, Month 1