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I spend a lot of time talking with owners of lower MM biz (<$10M EBITDA)
They ask: what types of ?’s should I be asking potential buyers?
I bucket into 3 categories (with Top 15 ?’s to follow)
1. Qualify the buyer
2. Align expectations
3. Confirm the 'no a**holes rule'
They ask: what types of ?’s should I be asking potential buyers?
I bucket into 3 categories (with Top 15 ?’s to follow)
1. Qualify the buyer
2. Align expectations
3. Confirm the 'no a**holes rule'
3 categories of seller ?'s:
1. Qualify buyer: just bc someone says they want to buy your biz, doesn’t mean they can
2. Align expectations: make sure you’re on same page about whats important to you
3. No A**holes: life is too short to work with people you don’t like. Enough said
1. Qualify buyer: just bc someone says they want to buy your biz, doesn’t mean they can
2. Align expectations: make sure you’re on same page about whats important to you
3. No A**holes: life is too short to work with people you don’t like. Enough said
My Top 15 ?’s for sellers to ask buyers:
1/ Why are you interested in my company? Why us and why now?
1/ Why are you interested in my company? Why us and why now?
2/ Have you made similar investments in a company like mine? If so, how did they work out?
3/ Is your investment case based on growth or cost-cutting? What is your plan for my employees?
4/ Where does the capital you invest come from (and what contractual obligations do you have relating to investment period, return of investment funds, industry type, company size, etc.)?
5/ Do you have proof of commitments for the funding necessary to complete this transaction?
6/ Do you expect to finance any of this txn with outside bank debt or other financing (and if so, has it been approved and how much of the txn will be funded with debt)?
7/ What is current capacity of the investment team and are you able to commit the necessary time and resources to follow-through on this investment?
8/ How many other investments are in your portfolio and how much time do you spend with them?
9/ How do you approve deals? Who (or what committee) makes the final decision… are the final decision-maker(s) actively involved in discussions for this txn?
10/ How many deals close and fund once you’ve submitted a Letter of Intent?
11/ What does your txn process look like and how long does it typically take? What do you think can make it go faster or slower?
12/ What is the typical investment time horizon and how long do you expect to be partners on this? What do you view as a successful outcome?
13/ What has been your worst (or most challenging) investment and why didn’t it go according to plan? Can I talk with them?
... the way they react/answer this question is VERY telling
... the way they react/answer this question is VERY telling
14/ Can you provide a list of previous sellers you’ve partnered with? Can I can talk with them?
15/ Why do you think you’ve been successful/what is your advantage? How does it apply to what we’re doing together?
