Get on the right buyer’s radar
Monday, September 10, 2007/
If your business is already known throughout its industry, selling can be a breeze. Getting on the marketplace’s radar now will pay off when the time comes to sell. By TOM McKASKILL.
By Tom McKaskill
When you decide to sell your business, you can do what the vast majority do and hand the process over to a broker, who will simply advertise the business to solicit the highest offer in the shortest possible time with the least effort on the part of the broker.
However, this is hardly likely to find the buyer who can best exploit the potential in the business, an essential requirement if you are to gain the highest price. Instead of giving the task to someone who knows little about your business, and probably even less about who the right buyer could be, take charge of this process yourself.
For a business where the value is based on its ability to generate future profits, the highest price on sale will be obtained by finding a buyer who can fully appreciate the potential in the business and is able to exploit that potential. That is, you really need to find a person or corporation who can develop the business and who has the capacity and capability to do so.
Simply advertising the business in the hope of finding someone or some corporation that can best develop the business is as reliable as tossing your hat in the air to see if it lands back on your head.
The right buyer is almost certainly a corporate executive within your own industry who wishes to transition into their own business, or a corporation in your industry, undertaking a roll-up or consolidation strategy. That being the case, your best strategy is to become known within your industry and get yourself on the target list for those companies looking for acquisitions.
The best corporate acquirers are frequent buyers, have very good processes for integrating new acquisitions, and will be able to fully appreciate the preparation work you have done and the potential you have built into your business.
You need to get on the radar of corporate executives who might be interested in buying a business and on the target list of corporations undertaking acquisitions. Time spent supporting the industry association, developing a high profile through industry media and industry events and getting known through local and national public relations won’t be wasted.
Other ways to put yourself in front of the right buyers include tracking acquisitions activity within your industry to discover who is buying and ensure you get know to them and making contact with industry specialist investment banks, business brokers and corporate finance departments of the larger professional firms. Over time you need to build up a list of potential corporate acquirers and business advisers who have good contacts within your industry.
When the time comes to sell your business, you can then be proactive in contacting those on your list, some of which will by then already know who you are and what you do and will be able to quickly evaluate a potential purchase. You can still use a business broker or an investment bank but you can have confidence that the best potential buyers will be contacted during the sale process.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.