02 Apr Finding The Right Buyer For Your Business
To match the right buyer with the right business, be prepared for a process that starts before you even seek a buyer. If you set the price too high you might scare away good potential buyers or if too low, you’ll lose out.
Determine what your business is really worth
Have you determined what your brand is worth on top of the basic product or service? The brand represents the sum of all intangible assets such as the company image, industry reputation and customer good will. Brand loyalty is a valuable asset.
Does your business have a competitive advantage and good growth potential? The buyer will want to determine future earnings. In which direction is the business trending – up, down or flat? You want negotiating power for a fair and reasonable price, and all your books must be in order.
Reaching potential buyers
You don’t want to risk negative publicity by putting your business on sale, especially as any deal can take many months to close.
A broker, advisor or intermediary may have access to deal flows and will approach potential buyers discretely. This way, potential buyers can also be pre-qualified based on background financial information, business experience and complementary skills.
Setting the pitch
Understand that there are different types of potential buyers. Anyone could be a prospect, from employees, customers and suppliers to competitors or a business looking for a new market. Just as you need to know who your customers are before you pitch the message, you need to know your potential buyers and pitch accordingly.
– Financial buyers will be more interested in your company’s stability, for example.
– Strategic buyers will be more focused on how the company fits into their own long-term plans.
– Tactical buyers might specialise in turnaround situations and will look for a business they can adapt for profit.
Finally, what will happen as a result of the deal? Will you keep a minority stake? Will the buyer retain or replace staff? The key to a smooth transition for everyone is in finding the right buyer.