What if my broker brings an unqualified buyer?

An unqualified buyer can cost you time and, if you share information with them, put it at risk. Check whether your listing agreement says anything about how you must deal with buyers the broker introduces. The sound response is to control what the buyer sees, ask how they were screened, and watch what you are asked to sign (see what a listing agreement contains). None of this requires an accusation against the broker.

Control what the buyer sees

BDC says it is customary to sign a confidentiality agreement and a letter of intent to pursue discussions with a seller, and that the confidentiality agreement aims to protect information belonging to both parties. BDC also warns that, depending on a business-for-sale website’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. Release detailed financial or operational information only after the confidentiality agreement is signed, and release it in stages.

Ask how the buyer was screened

Ask the broker, in writing, what the buyer has shown about their ability to complete a purchase and their experience with a business like yours. BDC describes the letter of intent stage as the point where, after initial marketing and buyer interest, a serious buyer submits a letter of intent. If a buyer will not put their interest in writing, ask the broker why. Check your listing agreement too, and ask your lawyer whether the broker’s fee depends on the buyer being able to close.

Watch the exclusivity period

BDC explains that a letter of intent can assure the buyer a period of exclusivity during which they conduct negotiations, and that it can create binding obligations on confidentiality and exclusivity. If the buyer is not qualified, a long exclusivity period could keep other buyers away. Have your lawyer check how long it runs, what ends it early and what you give up. Do not sign it just to keep the broker content.