How first-time buyers of businesses reduce the fears of sellers and brokers: The Money Question
Ted Leverette The Business Buyer Advocate
For decades: Helping people find and buy the right businesses the right ways. Avoid dumb deal. Make good deal. Everybody happy. OH YEAH! (I'm not a broker.)
Psst …
They have it. You want it. They do not want to give it to you.
“Show me the money!” That’s the first and foremost question asked by smart sellers and business brokers when interacting with people purporting to be?business buyers.
The availability of financing can also impact the timeline of small and midsize business sales and acquisitions. If buyers need to secure financing, it can take (lots of) time to identify lenders or investors, submit applications, and secure funding.
The financing structure of the acquisition can also impact the timeline. If the buyer needs to secure multiple sources of financing or involve third-party investors, it may take longer to finalize the acquisition.
Ideas to reduce the fears of sellers and business brokers:
Some of these may appear to be similar; focus on what’s not.
Test the Market for Financing: Before you need it, query potential sources of financing. Try for “pre-approval” letters or other kinds of evidence that shows lenders/investors on standby. Show your plausible plan for how you will finance the purchase of the business, and how you will fund its operation after the company changes hands. This may involve obtaining business loans, getting investors, or using personal funds.
Have a Financing Plan: Create it before making an offer on a business. This can include obtaining pre-approval for a loan, having cash reserves, or seeking out alternative funding sources. A solid financing plan can increase your credibility as a buyer and make the transaction process smoother.
Demonstrate Your Commitment: Invest your own funds or assets into the acquisition or, if you’re investing with passive investors or working partners, take on a larger portion of the financing than they are. This can help show everyone that you are serious about acquiring the business; that you’re committed to its success; that your skin is in the game.
Highlight Your Financial Expertise: Explicitly show how you and/or your advisory team have the necessary financial expertise. Do it by conducting financial analysis and forecasting. Create financial models, and develop a financing strategy for the business. This can help show the seller that you have a strong understanding of financial management; it helps increase their trust in your ability to manage the business’ finances.
Offer Alternatives for Creative Financing: 500 tactics are in my book, “How to Get All the Money You Want For Your Business Without Stealing It.” It can help you overcome financing challenges and demonstrate your commitment to the success of the business. This can help show sellers that you are flexible and open to creative solutions, and increase their willingness to work with you.
Have a Plan B: What are you going to do if the deal falls through or if you encounter unexpected challenges? This may involve identifying alternative financing options, considering other businesses to purchase, or exploring other career paths. (If you’re the seller, what else could you do besides sell in the most traditional ways?)
Reality: Small businesses often operate on tight budgets, and many first-time buyers struggle to (or can’t) secure the necessary financing to purchase and then run the business. This can lead to cash flow problems, difficulty paying suppliers and employees, and a lack of resources to invest in growth opportunities. (120 Financial Lifelines for Small Businesses)
How can first-time buyers prepare themselves and reduce the fears of sellers and business brokers who are leery of dealing with people not having first-hand experience with M&A?
With the right advisory team and approach, and a strong commitment to success, even novice buyers can successfully navigate the M&A process and acquire the business of their dreams.
Concentrate on your mindset, which includes your mix of knowledge, preparation, professionalism, patience, and relationship-building. That’s how you can successfully navigate the M&A process.
And, perhaps most importantly for searchers:
Selling?
How Buyers Think--And How Owners Use the Buyer View to Prepare & Sell Their Small or Midsize Company.
Tips
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Whew! Let’s pause here. Zoom with me to improve your opportunity. Maybe a second opinion can make all the difference for you?
I am the Original Business Buyer Advocate ?, and I can improve your marketability to business sellers, brokers, investors, and others. And then show you how to find and buy the right businesses the right ways.
Email me from my website, https://partneroncall.com/. Or, DM me on LinkedIn.
Why me?
For decades, worldwide, I’ve evaluated, trained coached and advised searchers and buyers on the basis of hundreds of done deals. My colleagues have shared information about thousands of searchers and dealmakers.
Not sure?
Watch this:
Read this:
Preview my books:
21st Century Entrepreneur Ideas for Kids and Aspirational Adults (Complimentary)
How to Get ALL the Money You Want For Your Business Without Stealing It (USA and Canadian versions.)
Ted J. Leverette
The Original Business Buyer Advocate ?
“Partner” On-Call Network, LLC
Each Office Independently Owned & Operated
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