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How To Find A Suitable Buyer For My Business
Selling a business isn't the easiest sale you'll ever make, especially in harsh economic conditions with capital drying up and investors wanting to limit their risk profile. Putting your business in the shop window and looking for an attractive exit takes time, and you will need to put in plenty of work to find and negotiate with potential buyers. If you are patient and have time on your side, selling your business can be wildly lucrative but for many business owners, finding a profitable exit from a company is easier said than done.
The reality of the matter is buyers as scarce, but you can attract several offers if you know how to position your business for a sale. If you're not sure how to do this, then check out these eight ways to attract the buyer who will best meet your objectives and value expectations as a seller.
Know what you are looking for in a buyer
If you want to find a suitable deal you can't be messing around and thinking anyone with an offer is the ideal person. You need to narrow down the type of buyer you're looking for if its a competitor, small business owner, venture capital, angel investor and narrow your focus on one of those niches for the best results.
As a seller, you typically have objectives outside of purchase price when selling their business. These objectives could include keeping the company open, retaining employees, or allowing the seller to reinvest in the business alternatively it could be to dissolve the business into another existing one and allowing a competitor to consolidate their market share.
Think of which situation would net you a premium for your business and then double down on that sale target.
Don’t wait for a buyer
Selling your business requires you to market it in the correct channels; you cannot put up a for sale sign and expect calls like you would hope or ad online. It's not as if these methods won't work but what you're looking for is quality over quantity. You want to spend time reviewing serious offers and not wasting time entertaining proposals below your asking price range.
You can start by reaching out to people in your network or place ads on classified websites or in the newspaper to gain initial interest in your business and start going through leads.
Venture capital or VC
Additionally, if you have a big angel or venture capital market in your region, you may want to reach out to these firms to either pitch your business or build relationships in networkers where investors are open to purchasing parts of a business or the entire company.
Reach out to your banks and business lenders
Banks and financial institutions deal with businesses and owners all the time and often keep a record of the owners and partners they work with and build relationships with these owners. You can approach some of these financial institutions to see if they can reach out to their client base to see if anyone is willing to purchase your business and offer them a brokers fee for connecting you with possible buyers.
Work with an investment bankerAn investment banker’s ability to broker a transaction is pretty high as they have access to loads of esteemed clientele. They can offer sellers access to a broad universe of potential buyers. Investment bankers build and maintain close relationships with both financial and strategic buyers, many of which a seller may not be able to access or even know exist without the banker’s help
Work with a business broker
If you've still got too much of your focus on running your business and cannot fully commit to all the time it takes to sell your business; you can always reach out to a business broker. These companies or individuals will do the heavy lifting for you by networking and connecting you with interested buyers. However, these services aren't free, and you will have to give up a portion of your sale to these brokers.
It may be costly depending on the size of the sale, but it could turn out to be cost-effective in the long run and save you plenty fo admin and drama.
Create marketing materials
Buyers are shallow; they make a lot of judgments very quickly based on their perception of your business and brand sentiment from customers. It is critical that a business is introduced to potential buyers with marketing materials that are detailed enough to capture all the complexities of a business’s “story,” and not just how it appears on the surface.
Showcase case studies, tutorials, revenue, market share and other data that buyers may find attractive and present them in a professional digital or printed prospectus.
Promote the company’s strengths
If you've been in business long enough to be able to consider selling it, you'll know the power marketing and crafting an engaging narrative, and the same for selling a business and presenting these strengths correctly to buyers can assist in maximising value. It is often more important to highlight what a buyer wants to buy, versus what the seller is willing to selling.
Do not try to hide the company’s weaknesses
Due diligence is fundamental for a successful transfer of ownership and because this process involves extensive research and review from experts in a variety of fields pouring over every detail for two to three months its best to be forthcoming. If there is an issue, it will come to light, and its best to front-run a buyer's expectations rather than concealing an issue. This lack of transparency can impact the value a buyer is willing to spend, or worse have them take the deal off the table.
Business selling platforms
As mentioned before selling a business is quite an arduous task and takes time to get right, its not something you can simply advertise and expect buyers to come knowing on your door with offers. You need to go through proper channels which not every business owner has access to, which is why online business selling platforms have become so popular of late.
Depending on your country you may find there are localised versions of business selling platforms that list your company on their site and promote it to their audience of speculative buyers.
Talk to multiple buyers
Buyers know that it is in their best interest to isolate a seller, and they are often actively seeking “proprietary deals”, where a seller only engages with a single buyer or try to get you to focus on them to get you to have less leverage. This is because buyers know that if their goal is to buy a business for the lowest price and on the best terms. If you want to take back ownership in negotiating a fair exit price, you need to have multiple offers on the table as leverage come negotiating time.
If you would like to know more about marketing for your business then don’t be shy we’re happy to assist. Simply contact us
Are you looking to promote your business?
South African small business owners can create your free business listing on nichemarket. The more information you provide about your business, the easier it will be for your customers to find you online. Registering with nichemarket is easy; all you will need to do is head over to our sign up form and follow the instructions.
If you require a more detailed guide on how to create your profile or your listing, then we highly recommend you check out the following articles.
If you enjoyed this post and have a little extra time to dive deeper down the rabbit hole, why not check out the following posts on side hustles.
- 5 Tips for Funding Your Small Business
- Small Businesses That Can Go Digital During The Lockdown
- 10 Retail Market Secrets That Every Small Business Should Know
- Don't Ignore These 4 Digital Marketing Tips for Small Businesses
- 14 Ways To Leverage Facebook As A Small Business
- How South Africans Can Kickstart Their Side Hustle
- Alternative Funding Solutions a Small Business Needs to Know
- How South African Small Businesses Waste Money