NEW: Tom McKaskill
Tuesday, April 24, 2007/
Bad news if you’re selling the business. To get the best price you need to bypass the broker and find a buyer yourself.
Finding the right buyer
When you decide to sell your business, you can do what the vast majority of owners do and hand the process over to a broker. They will simply advertise the business to solicit the highest offer in the shortest possible time with the least effort.
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 best price. Here’s a better idea: Take charge of the process yourself.
For a business where the value is based on its ability to generate future profits, the highest sale price will be obtained by finding a buyer who can fully appreciate – and exploit – its potential.
That is, you need to find a buyer (person or corporation) able to develop the business. Expecting to find that buyer by simply advertising is as unrealistic as tossing your hat in the air and expcting it to land on your head.
The right buyer is almost certainly a corporate executive in your own industry looking to set up on their own, or another company 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 buyers’ radar.
The best corporate acquirers are frequent buyers, who 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.
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 the 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, you can then be proactive in contacting those on your list, some of which will 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.
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