Selling a Business Privately: What Buyers Will Ask For

Selling a business privately is straightforward until the first serious buyer appears. Then the questions start, and owners who have not prepared for them lose momentum at exactly the wrong moment. Here is what buyers ask for, roughly in the order they ask.

Three years of financials

Profit and loss statements, balance sheets and BAS lodgements for the last three financial years. Buyers are looking for a trend, not a single good year, and a gap in the record is treated as bad news until proven otherwise.

The add-backs, explained

Every private seller normalises their profit figure. Buyers expect that, and they expect each adjustment to be defensible: your own above-market wage, a private vehicle, a family member on the payroll, a one-off legal bill. Padding the add-backs is the fastest way to lose credibility.

Why you are selling

Retirement, relocation, health, a different venture — buyers accept all of these. What they do not accept is a vague answer. If the industry is changing or a major contract is ending, say so and explain how you have priced it in.

Customer concentration

If one client is 40 per cent of turnover, the buyer will find out. Disclose it early, and be ready to talk about contract length, relationship depth and whether the relationship is with the business or with you personally.

The lease

For anything with premises, the lease is often the deal. Buyers want the remaining term, the options, the rent review mechanism, the outgoings, and confirmation the landlord will consent to an assignment. Speak to the landlord before you advertise, not after you have a buyer.

Staff and systems

Who is employed, on what terms, what accrued entitlements are owing, and who actually holds the operational knowledge. A business documented well enough that a stranger could run it is worth measurably more than one that lives in the owner’s head.

A handover

Most buyers want the seller available for a defined period after settlement. Decide in advance what you are willing to offer — four weeks, three months, a consultancy arrangement — so you are negotiating from a position rather than reacting.

Prepare the answers before you advertise

Assemble this material into one information pack, release it in stages behind a confidentiality agreement, and the private sale process becomes far less daunting. We advertise your business on the major business-for-sale sites for a once-off $1,495 until sold, with no commission — see the business sale page, or read our companion guide on how to sell your business privately.

Questions? Call 1300 622 300.