What to look for in a buyer

Buyers differ. Here's how to judge them, and improve your chances of a sale that completes.

About half of deals fall through after a letter of intent is signed, according to one industry survey.

Deals fall through for many reasons. Choosing the right buyer reduces that risk, and reaching completion matters as much as the price.

Questions to ask any buyer

What is their track record?

Experienced buyers know the process, know what they want and are more likely to complete. First-time buyers often hit obstacles they aren't ready for.

Do they know your industry?

Industry knowledge helps, but be careful with competitors and closely related businesses. They have clear conflicts of interest during due diligence that can work against you.

Do they need outside financing?

This is critical. Outside financing can fall away, however certain it looks at first. A buyer who needs a bank or investors adds risk you can't control.

Who makes the final decision?

Ask whether they need approval from family, partners or an investment committee. Every extra approval is another possible roadblock, and strategic and private equity buyers usually have several.

What does their process look like?

Understand their timeline and what they need at each stage. Ask about deals that didn't complete, and why. It shows where problems might arise and whether they're realistic.

Do they renegotiate during due diligence?

Some buyers treat their first offer lightly and use due diligence to renegotiate. That is when you're most exposed to pressure, so learn their reputation early.

What are their plans for your business?

If your culture and people matter to you, ask. Strategic buyers usually fold a business into their own operations, and private equity usually plans to sell again within a few years. Either way, your business will likely look very different.

Can they give references?

As you would before a key hire, ask for references from owners who have sold to them. They'll tell you how the buyer really works.

How buyers compare

Feature	Pinehill	Strategic buyer	Private equity
No financing needed	Yes	Sometimes	No
No investment committee	Yes	Sometimes	No
Speed and transparency	Yes	No	Sometimes
No conflicts of interest	Yes	No	Sometimes
Keeps your team, culture and legacy	Yes	No	Sometimes
Permanent owner	Yes	Sometimes	No

If you're thinking about selling your business, we'd be glad to talk.