Follow Up And Deal With Buyer Feedback To Your Selling Memorandum

Soon after you send the buyer your Selling Memorandum they will begin to respond with questions and requests for more specific information.

This creates a problem: The prospect has a legitimate need for details about your business not included in your Selling Memorandum and you have a legitimate need to make sure sensitive information doesn't get into the wrong hands.

Consider that of all the prospects you talk to about your business, only one will actually buy it. But all the other prospects will still possess the knowledge you shared with them and you can't afford to have confidential information such as customers lists, recipes or other trade secrets getting into the wrong hands.

So managing the disclosure of information about your business and making judgments along the way as to which prospects deserve your time and attention are important keys to successfully selling your business.


Here are some things you can do to identify the best prospects and provide them with just enough information to move them through the buying process.

Ask The Buyer To Submit Their Questions And Requests For More Details In Writing

In order to protect your confidentiality, I strongly suggest that you tell the buyer to put his requests/questions in writing. Doing it this way:

  • Allows you to think through your responses more thoroughly before responding
  • Prevents you from spilling too much information off the top of your head
  • Means you won't get interrupted at the wrong time - imagine if 5 buyers have your selling memorandum and each called you at your office whenever they thought of a new question.
  • Puts all your communication in writing, so there is less chance of misunderstandings - you can always refer back to what you actually wrote instead of trying to remember what you said days or weeks ago.
  • Saves you time - certain questions will come up again and again. By putting your answers in writing you will have a pre-written response ready whenever a second or third prospect asks the same question.
  • So, try to keep the initial communication after the Selling Memorandum confined to email: it's quick, confidential and allows you the time to think through your responses carefully.

Continue To Qualify The Buyer Throughout The Process

An additional benefit of asking prospects to submit their questions in writing is that it is provides another opportunity qualify the buyer.

A professional will understand your request and gladly cooperate. Many buyer prospects already own, or have owned, a business and know the importance of confidentiality.

An unprofessional prospect on the other hand will often resist this request and pout about the "inconvenience".

Also, the weak prospect will often submit poorly written or unclear requests/questions.

Even though you did some qualifying before you sent the prospect your Selling Memorandum, continue to observe the buyer:

  • When they do communicate with you, is it obvious they have taken the time to prepare their questions and comments or does it seem like they are flying by the seat of their pants?
  • Do they respect your time and your need for confidentiality or do they call or show up unannounced?
  • If they take issue with your price, recast financials or other elements of your offering, do they make a reasonable case for their objection or are they just fishing for a low ball price

Eventually you will accept a Letter Of Intent from just one buyer and enter into an exclusive negotiation. At that point (and during Due Diligence) you will have to reveal all the details and secrets about your business. If you can't see yourself making this kind of a commitment to a particular buyer then there is no need to go any further - cut them loose now!

Balance The Buyer's Need for Information With Your Need For Confidentiality

Sometimes you will get requests for information from a very good buying prospect that you just can't fulfill. For example, after he receives your Selling Memorandum, the buyer may request to see a list of your customers or suppliers.

You must determine why the buyer wants this very specific information. Does he want to steal your customers from you? Or perhaps (and more likely) the buyer wants to see if you are overly dependent on one customer. If 80% of your revenues come from just one or two clients, that is a legitimate red flag that would concern any buyer.

Related: Is Your Business Sellable?

But your prospect doesn't need a complete list of your customers along with contact information to find this out. Instead, you can prepare a report that shows what percentage of your revenues comes from each customer (or the top 10 or 20 customers if that's more appropriate).

So, whenever a buyer makes a request for an entire category of information, don't flatly refuse. Instead, try to figure out the buyer's specific need or concern and then provide just enough information to satisfy that need.

In addition to the names and contact information of your customers and suppliers, information that should be off limits until a buyer signs a Letter Of Intent should include all proprietary information regarding your manufacturing processes, blueprints, recipes, product diagrams.

Remember: Only one of your prospects will end up buying your business. But all the other prospects will still possess whatever information you give them after they drop out.

So a good question to ask yourself when deciding whether or not to provide certain information to a prospect is:

If this person does not buy my business, could they use this information to harm my company's value or the success of the new owner?

If a buyer absolutely insists that you provide a certain piece of information that you are uncomfortable providing, you have three choices:

  1. You can flatly say "no" and risk losing him as a prospect.
  2. You can give him the exact information he asked for
  3. You can prepare a report that provides just the information you are comfortable revealing and hope that it will satisfy the buyer's needs.

Exactly how you handle a situation like this will depend on the quality of the prospect who makes the request.

You should rank all your prospects according to their qualifications and desirability - Which prospect do you want to take over your business? You may decide to give that prospect much more detailed information than the buyer at the bottom of your list.

But whatever you decide, make sure that the buyer understands you are not trying to hide anything. There is certain information that you are uncomfortable releasing now, but that once the buyer has submitted a Letter Of Intent he will have complete access to your business.

Moving Forward

Gradually some buyers will eliminate themselves from consideration. Others, you will eliminate due to a lack of agreement on the issues surrounding the sale.

But if a well-qualified prospect is interested after reading your selling memorandum and have had their questions answered, you will want to set aside an hour at night or on the weekend and talk to your prospect over the phone about the specifics of the possible deal. In addition to the price you may want to discuss:

  • Down payment and other financing terms.
  • Your future employment with the company
  • The future of key employees with the company
  • Any assets that will be removed from the company by you at the close such as a company car
  • A non-compete clause

The next step is for the prospect to visit and tour your facility.

You should reserve the privilege of an on-site visit for only the most qualified and interested of prospects.

Site visits are time consuming to prepare for, may be difficult to schedule and have the potential to unnerve your employees.

Buyers will often want to see the business immediately. Buy you will want to do as much as possible with the buyer via email, phone and through your well prepared Selling Memorandum before the prospect visits.

If the buyer isn't enthusiastic at this point there is no need to go through with a site visit.

About the author: Nicholas H. Parker is a business coach and marketing manager at He is highly interested in the web design sphere.

Published by ExitAdviser


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