Lance Hood:               Let's talk about how people can get the information they need when visiting a business. You have 36 critical questions that people need to ask every seller. Can you share some of those with us?

Richard Parker:           Yeah. Let me take you through a couple of them and some of these they seem so basic but you'd be surprised to learn how many people get into a meeting with a seller of a business and forget to ask the most basic questions.

                                    So for example, "What do you do everyday?" I mean the goal is for you learn what the seller does everyday because theoretically you're going to be replacing the owner. So "What is it that you do everyday?"

                                    "What do your customers say your company does best and worst?" Always find this is a great question. It's much better than if you say to the seller, "Tell me what your company does well and what it does poorly. What would your customers say you do best and what you do worst?" And it forces them to see their business a little bit through the eyes of the customer.

                                    "Why do people buy from you?" Another question. "What do you like best and worst about the business?" And make sure you checkout what they cite as worst because that's usually where the problems are. For example, if they say they don't like dealing with the employees. I'm willing to bet there's problems with the employees that you're going to inherit. Or if they say they don't like dealing with the accounting side. Well the books and records are probably in total disarray. So again, the question that triggers is, "What is it that you like best and worst about the business?"

                                    My favorite question to ask any seller is, "What keeps you up at night?" Because anybody that tells you that nothing keeps them up at night is lying. And what I've found is time and time again when you ask that question, "What keeps you up at night," you're going to really drilldown immediately to the core issues, challenges, problems, or concerns related to that business. It's a great question.

                                    Next thing, "If you Mr. Seller get hit by a Pepsi truck tomorrow what happens to the business?" And you'll be able to find out to get a good idea of what is the transition? Is there a number two person in place? Is the business just going to die? Well if he says, "I don't know we could I guess  go out of business." Well if that's the case you have evaluate whether or not the transition to you as the new owner can even be successful. Or if they will say to you, "Nothing. The business runs on its own." Well you really want to evaluate that. "Then why you have all these people?" Or, "Who's running the shop?" Somebody's got to be running it.

                                    "What happens for example Mr. Seller if you don't sell the business?" And this is really a great way to test their level of motivation. If they say to you, "Look. I'm selling this business. I'm retiring. I've already bought my retirement home in North Carolina." Or, "My wife has told me by September the 1st we're going on a trip with an RV for 12 months to visit the grandkids." If you see that level of commitment then you've got a lot of room to negotiate. Right?

Lance Hood:               Right.

Richard Parker:           On the other hand if they say to you, "Well listen. If I don't sell I don't sell. I'll keep running the business. It's a good business. I don't really care. It doesn't matter. It's got to be on the right terms and conditions, the right price." Well their level of motivation is not the same. I mean it's entirely different from someone who doesn't have anything pressing versus someone who says, "I've got an ironclad commitment to something. I've got to be out of this business by such-and-such a date." Right?

                                    It's very simple. It's like someone who's looking to buy a business on this flip side says, "If the right opportunity comes up I'll buy one." Versus someone who says, "Listen. I absolutely have had enough with doing what it is that I do everyday and I must buy a business because I'm no longer willing to keep doing it. And I'm buying a business by July 1st." Their motivation level is entirely different.

Or someone selling a home would be the same thing. Someone says, "Listen if someone comes in and gives us the right price we'll sell the house." Versus someone who says, "Listen. We've got to sell this house in the next 90 days or it's going to be foreclosed upon and we're going to lose it." So that's a real good question to ask to gage their level of motivation which is, "What happens if you don't sell the business."

                                    And another question I like is, "What percentage of the deal are you willing to finance?" Even if there's no representation that they're prepared to finance anything, that's a question you need to ask. It's like the bullet between the eyeballs. Right? Because they are typically going to be shocked. If there's a business broker involved they may falloff their chair. +

And it's the greatest question to ask because oftentimes the seller is going to blurt out an answer before the business broker even has a chance to say anything.

                                    And if they say to you, "We're not prepared to finance anything," you just want to say to them, "Why?" I mean it doesn't even make sense. Because you're going to get the seller to finance a good part of the deal. That's the key to all of this. And you need to set their expectations right from the beginning and let them know from the beginning that's going to be part of the transaction. It's no use wasting anybody's time.

                                    Now one important point to remember is you're not going to get an answer to every question at the first meeting. So you should initially have three goals for the meeting. Even though we have 36 questions, you're going to go through those in a logical progression, but you're really going to want to have three goals for meeting.

                                    Number one you want to learn enough to do more research. The second thing is you want to impress the seller. If you don't impress the seller there's no way they'll finance you. You should understand that right from the beginning. It's just simply not going to happen. So you need to impress the seller and that doesn't mean by going in there as a know-it-all. It means going in there and really knowing what you're talking about and demonstrating to them that you have the ability, the desire, and the commitment to operate their business successfully so that they're going to be happy to finance you, and they know they're going to get paid.

                                    And the one thing is when you impress the seller they'll go out of their way to get a deal done with you. Because what happens is once you walk out of that meeting as the buyer, if you've impressed the seller, no matter how many other people have come in and looked at the business, what happens is the seller either says to himself or turns around and says to the business broker - and I've been there, who says to the broker, "That's the guy! That's the guy I want to sell my business to. That's the guy." And then they'll go out of their way to make a deal happen. You can't even believe the terms you can get with them once you've impressed them.

                                    And third is determine the following. Do I like the seller? Do I trust them? Do I like the business? And can I see myself running it? I mean just those four fundamental issues, the questions to ask yourself after the meeting. "Do I like the seller? Do I trust them? Do I like the business? Can I see myself running it," is going to really provide you with some great clarity as to whether or not you're going to take this to the next step if at all.