Read enough buyer emails and a pattern appears. Different people, different backgrounds, and yet almost the same questions, in almost the same order. That is good news for a broker, because a question you can predict is a question you can answer before it costs you three weeks.
The questions that always come
- Why is the owner really selling?
- How many hours does the owner work, and doing what?
- What happened in the year revenue dipped?
- Are the add-backs real, and can I see support for each?
- Does any one customer, supplier or employee matter too much?
- What does the lease say, and will the landlord consent?
- What breaks if the owner leaves on day one?
- What has been spent on equipment lately, and what is about to need replacing?
- Will the key people stay?
- Is there anything legal, environmental or regulatory pending?
Why answering first works
A buyer who discovers a problem assumes there are more. A buyer who is told about a problem, with the cause and the evidence, tends to price it and keep going. The facts are identical. The trust is not.
Answering up front also filters. A buyer who cannot live with a known issue leaves before diligence, instead of after everyone has spent a month on it.
How to write an honest answer
State the issue the way a skeptical buyer would. Give the explanation. Point to the record it comes from. Then say what the buyer should do to verify it. If the item is still open, say that it is open.
What you leave out matters too. If there are no pending legal issues and no customer concentration, say so in plain words. Silence on a topic reads as avoidance.
Keep the list alive
The first buyer will ask something you did not predict. Answer it, then add it for every buyer who follows. By the fourth buyer, the document answers nearly everything, and your time goes to the conversations that need a person.
This article is general information for brokers and sellers. It is not legal, tax, or financial advice, and practice varies by deal, lender, and state.