A positive reputation is important in the sales process, and there are steps you can take now to ensure you have one. By TOM McKASKILL.
By Tom McKaskill
A good reputation can make a lot of difference when the time to sell comes. And getting that good reputation is something that takes a little work.
Rather than simply advertise a business for sale and hope that potential quality buyers notice it and are prepared to bid, the entrepreneur will achieve a better price for the business by proactively seeking out buyers.
This is where building a positive reputation pays off.
Most businesses do not have obvious potential buyers. While we know that most buyers will come from the industry in which the business for sale is active, potential buyers may be individuals who desire to own their own business as well as corporations in the industry who are engaged in roll-up or consolidation strategies.
While it is easier to generate a list of acquiring corporations, it is not easy to generate a list of corporate executives who might be interesting in buying. The path to the majority of potential buyers is to establish a reputation within the industry so that they know about your business.
Getting known within an industry is actually not that difficult. The majority of industries have their own industry association, conferences, education programs, charity events and trade journals. There are normally specialised magazines that focus on certain industries.
By getting executives involved in the industry association and industry events, the business puts itself out in the public domain waiting to be noticed. Additional exposure can come through speaking engagements at industry events, writing articles or cases for industry and trade journals and magazines and competing in industry or national competitions.
In undertaking these activities, the entrepreneur has the objective of getting on the radar of acquiring executives and corporations. By saying what you do and, especially, what you are good at, you can bring this to the attention of industry participants.
Many larger corporations continually scan for potential acquisitions and you simply have to bring yourself to their attention so that they consider you. If they have an interest, they will start monitoring your activities and are likely to proceed to develop a relationship with the business, perhaps informally, but with the intention of finding out more about the products, markets and management team.
We need to keep in mind that most larger corporations grow through acquisitions and therefore they are on a constant watch for acquisitions that fit into their longer-term strategy. Those who take this activity seriously will have full-time staff employed to undertake research into potential acquisitions and assist in the evaluation and integration of acquisitions.
Your job is simply to get on their list. Whether you then wait for an approach or proactively take the initiative of seeking them out, the end result is a potential buyer if there is a good fit.
Keep in mind that a good reputation also helps an acquirer justify the purchase to their bankers, shareholders and directors.
Individuals who are buyers are harder to identify and therefore a PR approach is probably best. Once they understand who you are and what you do, it is then up to them to make the approach. You could also supplement this strategy by getting to know business brokers and advisers who specialise in your industry, as this is possibly where a potential buyer will seek assistance.
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.
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