I run a small manufacturing business and we're exploring a sale in the next year or so. I've been browsing BizBuySell and a few others just to understand the landscape. The number of listings where the 'buyer' is clearly just someone with no capital, no experience, and sometimes no real intent is staggering. How do these people even get access to listings? Is there no vetting at all on these platforms?
Buyer Vetting
How do unqualified buyers even get onto listing sites?
There is essentially no vetting on the public listing sites. Anyone can create an account and message sellers. The platforms make money from listings, not from verifying buyers. The real filtering happens when you, the seller, ask for proof of funds and a background summary before sharing detailed financials.
I've sold two businesses through listing sites. The key is to ignore the noise and set up a gate. I required a signed NDA and a one-page buyer profile before I'd send anything beyond the teaser. That cut out about 90% of the unqualified inquiries.
It's frustrating. I listed a small retail operation last year and got a dozen inquiries from peopl who thought 'seller financing' meant they could put down zero. One guy asked if he could payy the down payment from the business's own cash flow after closing. That's not how any of this works.
That's exactly the kind of thing I'm seeing. So the consensus is that the platforms are just a bulletin board and the seller has to be the bouncer. Does anyone use a broker just to avoid dealing with this? I'm weighing whether the fee is worth the filtering
A broker does more than filter. They also keep you from wasting time on people who are just tire-kicking. But you still get some unqualified buyers because brokers want to show activity to their sellers. The difference is the broker handles the initial calls and you don't have to
Listing sites are pay-to-play for sellerss, free for buyers. That's the whole business model. Vetting buyers would reduce the number of inquiries and make the platform look less active. So they don't.
I've been on the buy side and the sell side. As a buyer, I appreciated that I could browse without jumping through hoops. As a seller, I hated it. The solution is to have a good teaser that clearly states requirements like 'minimum 20% down, proof of funds required.' Serious buyers will self-select.
How do they get on? They just sign up. There's no barrier. I once had a 'buyer' who turned out to be a competitor fishing for pricing infjormation. That's another reason to vet carefully.
Brokers are worth it if your business is large enough to command a decent multiple. For smaller deals, the fee can eat a lot of the proceeds. But the time savings might be worth it if you're still running the business.
The The competitor fishing angle is something I hadn't considered. We have a few local rivals who would love to see our numbers. I'll definitely require an NDA before any financials, but even then, proving they're a real buyer is tough.
Proof of funds from a bank or a letter from a lender is the standard. If they won't provide it, they're not serious. It's that simple. Don't accept a screenshot of a brokerage account either. Get a letter.
I'd also add that a good broker will pre-screen buyers and only bring you qualified ones. But you have to interview the broker just like they interview you. Ask them how they vet buyers and what their process is for proof of funds.
The listing sites could easily add a 'verified buyer' badge if they wanted. They don't because it would cost them money and reduce engagement. It's a race to the bottom for lead volume.
it's not just the listing sites. Even with a broker, you get some unqualified buyers. The difference is you're not the one answering the phone. If you value your time, the fee is often worth it.
One more thing: the platforms are incentivized to show sellers a lot of activity. They'll send you 'matches' that are barely relevant. Don't take it personally when most inquiries are junk. It's the nature of the beast.