Understanding the Transworld Buyer Qualification Process
As Business Brokers we receive a lot of questions about our buyer qualification process from business owners looking to sell their company. A common question we receive from owners is, how do we find the right buyer for a business that is for sale in Colorado? For good reason, business owners are concerned with the legacy of their company and want to ensure there are checks in place as potential buyers move through the buying process. In Transworld’s experience, it is difficult to sell a business if the buyer and seller involved in the transaction do not get along. So, there is a qualitative aspect to our qualification process as well.
What is a Qualified Buyer?
A qualified buyer is a buyer for your business that meets two initial checkpoints. First, the buyer will need to have the financial capability or access to capital to invest in a business in your sales price range. Secondly, they need to have the skill set to purchase a small business in the industry they’re inquiring about. However, depending on the business this may not always be as clear cut. If for example, the business already has management in place and is run owner absentee, limited experience can be appropriate. A good example where a buyer may not be the right fit, is if the new owner will require a master plumber’s license and the buyer does not have one.
What Does Financially Qualified Mean?
A financially qualified buyer is someone who has access to capital they can liquidate to invest in a down payment and the purchase price; like a savings account, 401K or HELOC, or they are capable of receiving financing from a bank (i.e. they have good credit and a clean record).
How Long is the Buyer Qualification Process?
The buyer qualification process is not a long process and can be completed in a few ways. After inquiring on businesses for sale, a business broker will set up a phone appointment or in person meeting to discuss the business for sale. At this time, the broker and buyer will have a conversation about business goals, financial capabilities, and their prior experience. Part of the buyer qualification process is completing a buyer profile which provides answers to questions like, does the buyer wants a franchise business or real estate included in the transaction?
How Can You Become a Qualified Buyer?
It is rather straightforward to become a qualified buyer. All it requires are the following items:
- Commitment to the sale process
- A phone call or meeting with a business broker
- Being prepared with personal financial information
- Submitting a buyer profile
- Communication with your business broker
- Signing non-disclosure agreements on businesses for sale
Why Do We Qualify Buyers?
This is really a two-part question, “Why do we qualify buyers for sellers?” and “Why do we qualify buyers for buyers?” Transworld Business Advisors is very passionate about the Colorado small business community and we take our role in helping it continue to thrive seriously. So, for sellers, we qualify buyers to make sure they have the finances and experience to reach closing, but also to ensure that the legacy of the selling business can be kept intact. For buyers, we qualify them to make sure they are set up for success with their acquisition. We would never want to help a buyer acquire a company they don’t have the capital to run long term, that would be doing our clients a disservice. At the end of the day our role as transactional advisors is to set both sides of the transaction up for success!
To learn more about selling your business with Transworld Business Advisors and our buyer qualification process, schedule a free consultation with a business broker or visit our website for more information.
Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle!
