Selling a Business: Reducing Risk for the Buyer

The key aspect of selling a business is finding a buyer that wants to purchase the company. High risk is one common flaw that turns many buyers. Most buyers only look for an acquisition with a good chance of success, for obvious reasons. The following are tools that will help reduce the buyer’s risk.


Termination Fees

If the seller agrees to pay a termination fee if the deal falls through, it not only lowers the risk of the deal, but reassures the buyer that he or she is confident that the business will sell. The induction of a termination fee illustrates confidence in the company. This can be perhaps even more effective than the prospect of a payout.



Along the same line of termination fees, placing a portion of the payout in an escrow account insures the buyer for any unforeseen problems.


Due Diligence

Perhaps the best way to reduce risk is through due diligence. Utilizing an M&A expert will help verify the validity of the due diligence details. When you lay out the company’s background on the table, the buyer will have the chance to analyze risk and create a plan of action for possible problems before closing. Thorough due diligence is the key to risk reduction for your buyer.


If you are looking to sell a business, contact George & Company today for a free consultation.