Dealing with Buyers in the Lower Middle Market/Middle Market

When waiting for financials from the seller, go for a buyer/seller call in the interim to move the process forward. If the buyer wants to wait for financials, then request that the buyer write out their questions of the seller in an email and then forward these questions to the seller. This should set up the next step which is the buyer/seller call. After which financials will be more forthcoming. In fact, it is better to not even ask for financials from the seller until after having the buyer/seller call. Business owners feel more comfortable handing over financials to individuals that they have actually spoken to. If the buyer is only concerned with the numbers, the questions can be regarding top line and ebitda for last three years; this will serve as the questions which will then set up the call.

Qualifying Buyers

When buyers inquire through BizBuySell/BizQuest often times they only appear as individual buyers which typically only pay 3x to 4x EBITDA. Since our LMM/MM Valuation Guide will generally require a higher multiple, it is important to screen out these individuals by saying the following:

“Sure, I’d be happy to. Would you be buying the company individually or on behalf of a corporation”

Since most sellers do not have to sell, they are willing to wait for the right strategic buyer to purchase their company in line with the LMM/MM Valuation Guide.