Prepare for Acquirer Questions When Selling a Business


You may be eager to sell your business. It is exciting to have an acquirer at your doorstep. How will you feel when an acquirer starts looking inside every inch of your business?

Most professional acquirers will have a checklist of questions. These questions range from objective to subjective. They need answered before getting serious about buying your company. 

Examples of objective questions include:

  • When does your lease expire and what are the terms?
  • Do you have consistent, signed, up-to-date contracts with your customers and employees?
  • Are your ideas, products and processes protected by patent or trademark?
  • What kind of technology do you use, and are your software licenses up to date?
  • What are the loan covenants on your credit agreements?
  • How are your receivables? Do you have any late payers or deadbeat customers?
  • Does your business require a license to operate, and if so, is your paperwork in order?
  • Do you have any litigation pending?

Next, they’ll try to get a subjective sense of your business. This includes figuring out just how integral you are personally to the success of your business. Investigative work as well as some tricks of the trade is required to get this done. For example:

Trick #1: Making last-minute changes

By asking to make a last-minute change to your meeting time, an acquirer gets clues as to how involved you are personally in serving customers. If you can’t accommodate the change request, the acquirer may probe to find out why. An acquirer will try to determine what part of the business is so dependent on you that you have to be there.

Trick #2: Checking to see if your business is vision impaired

An acquirer may ask you to explain your vision for the business. This is a question you should be well prepared to answer. However, he or she may ask the same question of your employees and key managers. If your staff members offer inconsistent answers, the acquirer may take it as a sign that the future of the business is in your head.

Trick #3: Asking your customers why they do business with you

A potential acquirer may ask to talk to some of your customers. He or she will expect you to select your most passionate and loyal customers. There will be an expectation to hear good things. The customers may be asked a question like ‘Why do you do business with these guys?’ The acquirer is trying to figure out where your customers’ loyalties lie. If your customers answer by describing the benefits of your product, service or company in general, that’s good. If they respond by explaining how much they like you personally, that’s bad.

Trick #4: Mystery shopping

Acquirers often conduct their first bit of research before you even know they are interested in buying your business. An acquirer may pose as a customer or visit your website. Acquirers can also come into your company to understand what it feels like to be one of your customers.

Make sure the experience your company offers a stranger is tight and consistent. Try to avoid being personally involved in finding or serving brand new customers. A potential acquirer should not view you personally as the key to wooing new customers. They’ll be concerned that business will dry up when you leave.

You may not be expecting an acquirer any time soon. It’s never too early to ask yourself the questions an acquirer will.