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Listening

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We have just touched on the importance of listening and it bears repeating.

An old adage says that the Almighty gave us two ears and only one mouth so that we might listen twice as much as we speak. This is great advice for the process of buying or selling a business. Both sides should be listening for deal breakers and bedrock motivations. Ask the direct questions, but also listen for indirect answers.

As a buyer, listen to why the seller is interested in getting rid of the business. Is he or she just trying to get out from under a financial burden? Is he or she unsatisfied with returns? Maybe the seller simply wants to retire or is facing medical problems that preclude running the business. Or maybe he or she has inherited partners he or she doesn’t want. Any of these are fine reasons and you should feel comfortable with them. However, beware of hidden knowledge. Does the seller know about something coming that will hurt the business – competition moving in, a change in technology that could lead to obsolescence, or new patents about to be issued? Ask. Be blunt; be nosy; listen carefully to the reasons offered by the buyer. Weigh those against everything else you know about this person. If you have doubts, get in writing that withholding information that could affect the future profitability of the company is a breach of the agreement and requires a refund of all money received for purchase of the company. That should send some fur flying. It may also get you the information you need.

Buying and Selling a Business

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