21 Aug Understanding the Buyer’s Perspective Can Help You Sell
Selling a business is not just about finding someone with the financial resources to make an offer. It’s about finding someone who is prepared to make one of the largest professional and financial decisions of their life.
For many buyers, acquiring a business means leaving a stable career, investing a substantial portion of their savings, taking on debt, and assuming responsibility for employees, customers, and the future of the company. Even when the opportunity is attractive, the decision carries real risk.
Understanding what a buyer is experiencing can make you a more effective seller and help keep a viable transaction moving toward closing.
Isn’t Buying a Business Just a Financial Decision?
Beyond evaluating financial statements, buyers are asking whether they can successfully operate the business once they take over. They’re thinking about whether its earnings will continue after you depart, if the employees will stick around, and what could happen if the economy or industry changes.
As the process advances, those broad concerns split into two kinds of questions.
Some are about verification: is what I’m being told actually true?
- Do the tax returns, P&Ls, and other records support what was initially presented?
- Are the proposed add-backs supportable? Are some – such as entertaining clients, personal auto expenses, and officer health insurance – likely to continue under new ownership?
- Are any exclusive vendor relationships documented, or just verbal understandings?
- Are employees paid a fair market wage, how are bonuses structured, and have any raises been deferred?
Others are about risk allocation: who absorbs the downside if something goes wrong:
- Does the business require special licenses, who currently holds them, and what does re-credentialing involve?
- If there’s work in progress, what stage is each project at, and what’s already been billed and paid?
- Is there exposure to tariffs or supply chain disruption that could affect future earnings?
- What working capital or additional investment will the buyer need to bring, on top of the purchase price?
These are reasonable and predictable questions for any deal with a degree of complexity. A buyer is looking for assurance that once the training and transition phase is complete, they will have the knowhow, relationships, and capital to carry the business forward.
Preparation can reduce some of that uncertainty. Organized financial records, documented operating procedures, accurate information about customers and employees, and clear explanations of unusual financial trends help a buyer understand what they are purchasing. Transparency builds trust and generally leads to a smoother due diligence process.
Preparation only works, though, if it produces answers, not reassurance. Ask a seller about vendor exclusivity and the honest answer might be “we’ve never put it in writing, we just assume they wouldn’t leave.” Ask who would take over a family member’s role and the answer is sometimes “someone on staff could probably do it,” without anyone identifying who or how long it would take to train them. These aren’t dishonest answers, they’re just incomplete. An intake form can’t force a seller to do that work if they aren’t ready to.
The problem is that these questions don’t go away when they’re waved off early. The same ground gets covered again, usually in more detail, once the buyer’s lender starts its own underwriting. At that point, the seller is answering directly, without Sam Goldenberg & Associates drafting the response for them. Working through the harder questions now, while there’s still time and help available to think them through, is easier than working through them later under a bank’s timeline.
Why Does Buyer Confidence Seem to Flag After the LOI Is Signed?
Signing a Letter of Intent is often the honeymoon phase of a business acquisition. The buyer has decided the opportunity is worth pursuing, the principal terms have been outlined, and both parties have a sense of forward momentum.
The tone often changes once the buyer begins working closely with a lender. The bank asks questions the buyer may not have known to ask, and underwriting begins comparing the Confidential Information Memorandum, tax returns, P&Ls, add-backs, bank statements, and other supporting records.
Discrepancies emerge. Some are material. Others result from differences in accounting classifications, timing, or circumstances that have straightforward explanations. A buyer without the necessary context may not immediately know whether an inconsistency represents a serious problem or no problem at all.
Buyers can also feel that they should have identified these issues themselves. In response, they may become more cautious, revisit matters they previously considered resolved, or overcorrect by treating every inconsistency as a potential dealbreaker.
This does not necessarily mean the buyer has lost interest. It often means the transaction has entered a more demanding phase. At the same time, not every delay should be dismissed as buyer anxiety. Repeated postponements, an inability to satisfy the lender, or unwillingness to make decisions can indicate that a transaction is losing momentum.
Why Does Due Diligence Require Time and Effort from Everyone Involved?
It’s not only the buyer who carries the burden of due diligence. Selling a business also requires a considerable investment of the seller’s time. A thorough Confidential Information Memorandum and an organized due diligence file can reduce repetitive questions, but they cannot eliminate them.
As the transaction progresses, the seller may need to provide additional reports, explain financial discrepancies, locate supporting documentation, and answer detailed questions about operations. The buyer is simultaneously working through financing, legal review, insurance, licensing, and the practical realities of taking ownership. Underwriting places additional demands on both sides.
The cumulative process can take its toll. You may become frustrated by requests that appear repetitive or unnecessary. Buyers may become more guarded as they commit additional time and money without certainty that the transaction will close.
Patience matters, but patience does not mean agreeing to every request or minimizing legitimate concerns. It means responding to reasonable questions, providing context where it exists, and recognizing that increased scrutiny is a normal part of moving from an initial agreement to a completed sale.
What is Sam Goldenberg & Associates’ Role in this Process?
Sam Goldenberg & Associates helps sellers distinguish routine buyer diligence from issues that could jeopardize the transaction. We anticipate many of the questions buyers and lenders will ask, identify inconsistencies before they become obstacles, and help the seller provide clear, well-supported answers without becoming overwhelmed by the process.
We also serve as an intermediary when concerns arise. Not every request is reasonable, and not every discrepancy is material. Our role is to keep communication moving while determining which issues require additional information, a change in expectations, or a direct conversation between the parties.
We cannot see around every corner, eliminate the demands of due diligence, or remove all uncertainty from an acquisition. We can frontload much of the preparation, provide context when new issues arise, and help prevent an ordinary underwriting question from unnecessarily becoming a crisis.
Selling a business is about more than reaching an agreement on price. A transaction must withstand buyer scrutiny, lender underwriting, and due diligence before it reaches the closing table. Sellers who understand that progression are better prepared to respond constructively, preserve trust, and keep a sound transaction moving forward.
