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Corporate downsizing and growing employee dissatisfaction have created a new class of entrepreneur: the first-time business buyer. According to one report, nearly 60% of buyers have never owned a business before.
First-time buyers are not always the easiest people to negotiate with. But if you understand how they think, you’ll be in a much better position to close a successful deal.
1. They’re risk-averse and want deals they can understand
Many first-time buyers are leaving the relative safety of traditional employment, and that transition can feel daunting.
We worked with one prospective buyer who had spent 25 years in a corporate role and wanted more control over his future. But with that control came significant perceived risk. He planned to use retirement funds for the down payment and would be giving up a generous healthcare package. From our perspective, the risks seemed manageable. Healthcare could be replaced, and most of the financing came through a Small Business Administration loan. But to him, the stakes felt enormous. Walking away from a reliable paycheck and strong benefits is not a decision most people make lightly.
The more secure first-time buyers feel about the business and the financials supporting their investment, the more likely they are to move forward. They want transparency, clarity and professionally prepared financial reports their advisors can trust.
Strong financial reporting does more than demonstrate profitability. It signals that the business is organized, well-managed and free of unpleasant surprises.
2. They know what they don’t know
First-time buyers often depend heavily on professional advisors to guide them through an unfamiliar process. The challenge is that many do not think about assembling that team until they are already deep into a deal.
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