Many business owners think selling their business is like finishing a long journey: once you reach the destination, it’s time to relax. In reality, buyers often expect you to stay involved for a transition period—anywhere from six months to five years—during which you’ll continue working alongside them to help them fully realize the value of your business.
The Key Question
At some point during the sale process, a prospective buyer will ask you—often in a casual way—“Why are you selling your business?” While these eight words may seem harmless, they’ve caused more deals to fall apart than almost any other question.
Buyers ask this question to gauge your commitment to staying involved and to see if you are truly invested in the future of the business or if you’re already planning to exit.
While you don’t want to be deceptive, the way you respond matters. Answers like “I want to slow down,” “I want to travel,” or “I have a baby on the way and want more time at home” can make a buyer feel that you’re looking to wind down once they take over. Instead, they want to hear that you’re dedicated to helping them grow the business and unlock its full potential.
Here are some suggestions for how to respond based on your age:
- Under 40: Buyers will expect you to be focused on the business’s growth. Emphasize that you see a future in partnering with them: “To take the business to the next level, we need a partner who can bring more [resources like sales teams, distribution, capital, or geographic reach].”
- Ages 40-55: At this stage, it’s common to seek some liquidity while ensuring the business’s continued success. A good response could be: “I’m at a point where I want to unlock some liquidity from the value I’ve built so far, but I also want to find a partner who can help us grow even further.”
- Over 55: While you may be considering retirement, it’s important to express that you’re still passionate and fully committed. You could say: “I’m starting to think about retirement, but it’s still a ways off. I want to plan ahead and make sure the business continues thriving.”
Make sure to practice your response to this question so it feels natural when you’re inevitably asked by a potential buyer.
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