Buying a Business? Get Serious About How You Appear to Sellers

In Main Street business sales, it is not uncommon for a good listing to draw hundreds of buyer inquiries. Only a fraction of those ever make it to the negotiating table, and the reason is simple: many buyers are unqualified, are not serious, or have not earned the trust of the broker holding the listing. If you have sent inquiries and heard nothing back, you were not ignored. You were filtered.

Our job is to present the most qualified prospects to a seller, not tire kickers who will waste everyone’s time. It can sting to hear that as a buyer, but if the tables were turned and it was your business being sold, you would want the same screening applied on your behalf.

Expect to prove your ability and timing

We run a multi-stage screening process that eliminates many inquiries before a serious conversation ever happens. After signing an NDA, and before seeing the CIM, we want to talk with a buyer about timing, financing, background, and motivation.

Where do they live? What is their timing to complete a transaction? Is their spouse on board? What is their financial picture? What is their background, and how does it relate to this business? Can they show evidence of their net worth? Have they ever been involved in litigation? Are they working with a lender? Are they pre-approved for a loan? Why this business? Are they a US citizen?

Fail any of these and you are not taken seriously. This is not a power play, it is a proxy test. If you will not invest the time to properly document your readiness to buy a business, you will not survive three months of due diligence and lender requirements on a multi-million dollar acquisition.

Get a lender pre-qualification

For SBA-financed deals, we require a pre-qualification letter from a lender before moving forward. Getting screened by a loan broker is not the same — get screened by an actual lender. Not pursuing an SBA loan? You still need to demonstrate liquidity or proof of financing some other way. The lender pre-qual is not a guarantee of financing, and we know that. But it proves you have spent at least a few hours engaging with a lender and passed a basic financial screening. A buyer who will not go through a basic pre-qual process is a suspect, not a serious buyer, and this stage cuts the remaining pool again.

Getting ready to present a LOI

Submitting a letter of intent is a normal part of buying a business. But presenting unrealistic, unproductive LOIs just to tie up a listing and take it off market earns nobody’s confidence.

We often ask how many LOIs a buyer has presented and why they were not accepted. If the answer is a half dozen or more, or “none of the sellers I’ve spoken to are serious about selling,” that tells us something. It usually means the offers were well below market, expectations of due diligence are unrealistic, or the buyer is fishing for desperate sellers and throwing enough at the wall to see what sticks. Either way, that is not a buyer we spend time on.

Submit serious offers. Narrow your choices down to a few interesting businesses and pursue them with conviction, one at a time.

A tough business

We earn our compensation by successfully closing transactions, and we have had thousands of conversations with buyers and sellers on both sides of the table. The best brokers are selective on both sides, even turning down seller opportunities with questionable financials, or sellers simply testing the waters. That selectivity is what produces high closing rates, and we bring the same mindset to every transaction. We do not need to work with everyone who reaches out. We want to work with the serious buyers and sellers where we believe a deal actually gets done.

We start the buyer qualification process from scratch with every inquiry. The only way to differentiate yourself is by respecting the process the broker has to move an inquiry along the transaction pipeline.

What you can do right now

No shortcut replaces the fundamentals. The buyers who float to the top of a crowded market are the ones who show up already prepared:

• Complete all paperwork immediately, do not let it sit
• Have your SBA pre-qualification ready before you inquire
• Know your target industry, deal size, and thesis clearly
• Get your spouse on board
• Build a real deal team: lender, lawyer, and advisors who know your target deal size
• Submit LOIs with conviction, not volume

The broker is deciding in the first few minutes of a call whether you are one of the few who will meet the seller and be taken seriously. The market is crowded, but prepared buyers have a real edge precisely because most buyers are not prepared. That is the opportunity.

Want to see how you would read against that screen right now? The buyer readiness scorecard scores you across the same four things a broker weighs — capacity, clarity, preparation, and commitment — in about three minutes, and tells you where to start.

Mark Herrmann is the founder of Trustmark Mergers & Acquisitions in Charlotte, North Carolina. This article is general information, not legal, tax, or financial advice.